H&R Block Inc
) fiscal fourth-quarter net income of $2.01 per share, modestly
surpassed the Zacks Consensus Estimate but lagged the year-ago
results. For fiscal 2012, H&R Block's adjusted income came in
at $1.26 per share, exceeding the Zacks Consensus Estimate by
Though fourth quarter and fiscal year revenue were in line with our
expectation, it lagged the year-ago results as higher revenues from
tax preparation were offset by lower revenues from financial
Given the mixed results delivered by H&R Block, we retain our
Neutral recommendation on the company.
Counting on the positives, H&R Block has a sustained focus on
expense reduction initiatives. To serve clients better, have better
efficiency and accountability and line up resources to balance
long-term client and revenue growth, the company announced that it
had undertaken realignment strategies that included eliminating 350
positions and closure of 200 underperforming offices. It expects to
realize net annualized savings of $85 to $100 million from this
strategic realignment by the end of fiscal year 2013.
H&R Block is also increasing market share in the digital as
well as assisted space. The company's client base in digital
increased by 750,000, while in assisted space clients augmented by
150,000. Also, with refund anticipation loans (RAL) losing
importance, the company is at an advantageous position with its
Refund Anticipation Check (RAC).
H&R Block has always remained focused on returning more value
to its shareholders. In fiscal 2012, H&R Block spent $200.0
million to buyback 14.6 million shares. The company has already
spent $315.0 million to buyback 21.3 million shares in the first
quarter of fiscal 2013.
H&R Block also boasts of a dividend yield of 5.01%,
sufficiently higher than the industry average of 1.83% as well as
that of its nearest peer
) with a dividend yield of 1.01%.
On the flip side, H&R Block dropped its plan of acquiring 2SS
Holdings, Inc, developer of Tax ACT digital tax preparation
solutions as the federal judge passed a ruling against it on
antitrust grounds. The acquisition was intended to augment the
company's digital tax offerings as well as performance.
Had the acquisition materialized, H&R Block would have had
an enlarged client base. Also, the merger would have heated up
competition in the digital market, which is presently dominated by
BLOCK H & R (HRB): Free Stock Analysis
INTUIT INC (INTU): Free Stock Analysis Report
To read this article on Zacks.com click here.
Additionally, H&R Block's performance is tied to the overall
health of the economy. With the continuation of a stressed economic
environment and unemployment levels, the overall tax filing market
is expected to remain under pressure.
The quantitative Zacks #2 Rank (short-term Buy rating) for the
company indicates a slight upward boost on the stock over the near