H&R Block, Inc.(HRB Quick QuoteHRB - Free Report) looks well-poised to gain from its five-year strategy, which is known as Block Horizons 2025. The company is expected to deliver sustainable revenues, operating profit growth and healthy returns on investments, while also maintaining a strong balance sheet and liquidity position in the foreseeable future.

HRB 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.

HRB has grown 15.2% in the year-to-date period, outperforming 1.7% growth of its industry.

H&R Block, Inc. Price

 

H&R Block, Inc. price | H&R Block, Inc. Quote

Factors That Augur Well

H&R Block has a consistent track record of returning capital to shareholders through dividends and share repurchases. The company paid $177.9 million, $186.5 million and $195.1 million as dividends in the fiscal years 2023, 2022 and 2021, respectively. It repurchased shares worth $550.2 million, $563.2 million and $191.3 million respectively in 2023, 2022 and 2021. Such moves indicate the company’s commitment to create value for shareholders and underline its confidence in its business. They not only instill investors’ confidence but also positively impact earnings per share.

H&R Block’s current ratio (a measure of liquidity) at the end of the fourth quarter was pegged at 1.27, higher than the current ratio of 1.17, reported at the end of the prior quarter. Increasing current ratio bodes well for H&R Block as it implies lesser risk of default.

H&R Block has implemented a five-year strategic plan called Block Horizons 2025, which centers on leveraging both human expertise and technological capabilities to foster innovation. This strategy is designed to establish robust connections with small businesses through initiatives like Wave and Block Advisors. Additionally, it seeks to transform the Emerald Card into a consumer-centric, mobile-first solution catering to the needs of the underbanked population. Furthermore, the strategy is aimed at enhancing the speed and personalization of tax-related services by seamlessly integrating human expertise with cutting-edge digital tools.

Risks          

In the fiscal year 2023, operating expenses experienced a modest year-over-year increase, totaling $2.72 billion. The H&R Block faces the risk of the seasonality of the business. Most of the company’s clients file their returns from February to April in any given year. Tax filing constitutes a lion's share of the company’s revenues, and as a result, the company experiences a loss during the first two quarters of the fiscal year.

Zacks Rank and Stocks to Consider

HRB carries a Zacks Rank #3 (Hold). Here are some better-ranked stocks, which may be considered by investors:

Verisk Analytics(VRSK Quick QuoteVRSK - Free Report) has beaten the Zacks Consensus Estimate in three of the four previous quarters and matched on one instance, with an average surprise of 9.9% The consensus mark for 2023 revenues is pegged at $2.66 billion, which indicates a decrease of 8.2% from the year-ago reported figure. Earnings are pegged at $5.71 per share for 2023, up 14% from the year-ago figure. VRSK currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Automatic Data(ADP Quick QuoteADP - Free Report) currently has a Zacks Rank of 2. The company beat the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 3.1%. The consensus estimate for fiscal 2023 revenues and earnings implies growth of 6.3% and 11.1%, respectively.

Broadridge(BR Quick QuoteBR - Free Report) currently carries a Zacks Rank of 2. It beat the Zacks Consensus Estimate in two of the trailing four quarters, missed once and matched on one instance, the average surprise being 0.5%. The consensus estimate for fiscal 2024 revenues and earnings calls for a rise of 7.2% and 8.8%, respectively.