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Reasons to Retain H&R Block (HRB) Stock in Your Portfolio
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H&R Block, Inc. (HRB - Free Report) has had an impressive run year to date. The stock has appreciated 29.2%, significantly outperforming the 6.4% rally of the industry it belongs to and the 19.7% rise of the Zacks S&P 500 composite.
HRB has an impressive Growth Score of B. 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%. Earnings are expected to increase 10% in fiscal 2024 and 11.2% in fiscal 2025.
H&R Block has a five-year strategy, called Block Horizons, is in place. The strategy is focused on using human expertise and technological infrastructure to drive innovation. It aims to build strong relationships with small businesses through Wave and Block Advisors, develop Emerald Card as a consumer-centric, mobile-first solution for the underbanked and make taxation faster and more personalized by 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 strong balance sheet and liquidity positions.
We believe that the main drivers of its post-pandemic performance will be digital enablement of its business, client addition and retention in both Assisted and DIY and greater usage of AI and machine learning for product improvement and expansion in small businesses.
H&R Block has a consistent track record of returning capital to shareholders through dividends and share repurchases. It paid $177.9 million, $186.5 million and $195.1 million as dividends in fiscal 2023, 2022 and 2021, respectively. It repurchased shares worth $550.2 million, $563.2 million and $191.3 million, respectively, in fiscal 2023, 2022 and 2021. Such moves indicate the company’s commitment to creating value for shareholders and underline its confidence in its business.
Some Risks
H&R Block’s current ratio (a measure of liquidity) at the end of first-quarter fiscal 2024 was pegged at 0.80, lower than 1.27 at the end of the prior quarter and 0.92 reported at the end of the year-ago quarter. A decline in the current ratio does not bode well as it implies that the risk of default is more.
Zacks Rank & Stocks to Consider
H&R Block currently carries a Zacks Rank #3 (Hold).
Investors can also consider the following better-ranked stocks:
ROL has an impressive earnings surprise history, beating the consensus mark in three of the four trailing quarters and matching once, the average surprise being 7.2%.
FTI Consulting (FCN - Free Report) also carries a Zacks Rank of 2. The consensus mark for fourth-quarter 2023 earnings is pegged at $1.57 per share, indicating 3.3% year-over-year growth.
FCN has an impressive earnings surprise history, beating the consensus mark in three of the four trailing quarters and missing once, the average surprise being 8.5%.
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Reasons to Retain H&R Block (HRB) Stock in Your Portfolio
H&R Block, Inc. (HRB - Free Report) has had an impressive run year to date. The stock has appreciated 29.2%, significantly outperforming the 6.4% rally of the industry it belongs to and the 19.7% rise of the Zacks S&P 500 composite.
HRB has an impressive Growth Score of B. 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%. Earnings are expected to increase 10% in fiscal 2024 and 11.2% in fiscal 2025.
H&R Block, Inc. Price
H&R Block, Inc. price | H&R Block, Inc. Quote
Factors That Augur Well
H&R Block has a five-year strategy, called Block Horizons, is in place. The strategy is focused on using human expertise and technological infrastructure to drive innovation. It aims to build strong relationships with small businesses through Wave and Block Advisors, develop Emerald Card as a consumer-centric, mobile-first solution for the underbanked and make taxation faster and more personalized by 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 strong balance sheet and liquidity positions.
We believe that the main drivers of its post-pandemic performance will be digital enablement of its business, client addition and retention in both Assisted and DIY and greater usage of AI and machine learning for product improvement and expansion in small businesses.
H&R Block has a consistent track record of returning capital to shareholders through dividends and share repurchases. It paid $177.9 million, $186.5 million and $195.1 million as dividends in fiscal 2023, 2022 and 2021, respectively. It repurchased shares worth $550.2 million, $563.2 million and $191.3 million, respectively, in fiscal 2023, 2022 and 2021. Such moves indicate the company’s commitment to creating value for shareholders and underline its confidence in its business.
Some Risks
H&R Block’s current ratio (a measure of liquidity) at the end of first-quarter fiscal 2024 was pegged at 0.80, lower than 1.27 at the end of the prior quarter and 0.92 reported at the end of the year-ago quarter. A decline in the current ratio does not bode well as it implies that the risk of default is more.
Zacks Rank & Stocks to Consider
H&R Block currently carries a Zacks Rank #3 (Hold).
Investors can also consider the following better-ranked stocks:
Rollins (ROL - Free Report) currently carries a Zacks Rank #2 (Buy). For the fourth quarter of 2023, the Zacks Consensus Estimate for earnings is pegged at 20 cents, indicating year-over-year growth of 17.7%.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ROL has an impressive earnings surprise history, beating the consensus mark in three of the four trailing quarters and matching once, the average surprise being 7.2%.
FTI Consulting (FCN - Free Report) also carries a Zacks Rank of 2. The consensus mark for fourth-quarter 2023 earnings is pegged at $1.57 per share, indicating 3.3% year-over-year growth.
FCN has an impressive earnings surprise history, beating the consensus mark in three of the four trailing quarters and missing once, the average surprise being 8.5%.