Back to top

Image: Bigstock

Reasons to Retain H&R Block (HRB) Stock in Your Portfolio

Read MoreHide Full Article

H&R Block, Inc. (HRB - Free Report) has an impressive Growth Score of A. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth. The company has an expected long-term (three to five years) earnings per share growth rate of 12.5%.

The stock has gained a huge 73.4% over the past year against 13.1% decline of the industry it belongs to.

Factors That Auger Well

H&R Block has a five-year strategy called Block Horizons in place. The strategy is focused on using human expertise and technological infrastructure to drive innovation. It aims at building strong relationships with small businesses through Wave and Block Advisors, developing Emerald Card as a consumer-centric, mobile-first solution for the underbanked, and making taxation faster and more personalized through integrating human expertise with digital tools. Block Horizons is expected to help the company deliver sustainable revenues and operating profit growth, improve return on investments, and maintain a strong balance sheet and liquidity position.

H&R Block has a consistent track record of returning capital to shareholders through dividends and share repurchases. The company paid $195.1 million, $204.9 million and $205.5 million as dividends in the fiscal years 2021, 2020 and 2019, respectively. It repurchased shares worth $191.3 million, $256.2 million and $189.9 million respectively in 2021, 2020 and 2019.

Debt Woe Stays

H&R Block’s cash and cash equivalent balance of $1.06 billion at the end of the fourth-quarter fiscal 2021 was well below the debt level of $1.49 billion, underscoring that the company doesn’t have enough cash to meet its debt burden.

Zacks Rank and Stocks to Consider

H&R Block currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the broader Consumer Discretionary sector are BJ's Wholesale Club (BJ - Free Report) , Lifetime Brands (LCUT - Free Report)  and Sonos (SONO - Free Report) , each carrying a Zacks Rank #2 (Buy).

The long-term expected earnings per share (three to five years) growth rate for BJ's Wholesale Club, Lifetime Brands and Sonos is 8.2%, 14% and 41.9%, respectively.