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H&R Block Reiterated at Neutral - Analyst Blog
We have retained our Neutral recommendation on
H&R Block Holdings Ltd.
) as the stressed economic environment and high unemployment
levels will likely weigh on the positives. The tax preparer
currently carries a Zacks Rank #3 (Hold).
Over the last 30 days one of four estimates moved downwards, keeping the Zacks Consensus Estimate for the third quarter of fiscal 2013 at 2 cents and translating into a year over year increase of 325%.
Owing to the sluggish economic environment and high unemployment levels, the overall tax filing market is expected to remain stressed and H&R Block is no exception. Moreover, the continued shift from assisted to do-it-yourself mode of tax preparation mainly through digital online space is a threat to the company's operations.
Though the company is now growing its digital business, the
pace of growth is not yet satisfactory. The decision to drop the
acquisition of 2SS Holdings, Inc, developer of Tax ACT digital
tax preparation solutions led to dwindling market demand for the
services of H&R Block in the digital market which is
presently dominated by
Counting on the positives, H&R Block's cost reduction initiative particularly it's restructuring program to reduce workforce, cut down overhead expenses and augment operational efficiency has helped it to post improved operating earnings and narrow its loss.
It expects to realize net annualized savings of $85 to $100
million from this strategic realignment by the end of fiscal year
2013. Furthermore, the deal with
), where H&R Block intends to focus on the 112 best
performing Sear locations is expected to be slightly accretive to
fiscal 2013 earnings
H&R Block continues to increase shareholders' value. The company has already spent $315.0 million to repurchase shares in the first six months of fiscal 2013. In June 2012, the Board approved another $2 billion share repurchase authorization.
H&R Block also boasts a dividend yield of 3.36%, higher than the 1.36% dividend yield of Weight Watchers International Inc. ( WTW ) and 3.43% of that of Western Union Company ( WU ), among others from the industry. The company also scores strongly with the credit rating agencies.
BLOCK H & R (HRB): Free Stock Analysis Report
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WEIGHT WATCHERS (WTW): Free Stock Analysis Report
WESTERN UNION (WU): Free Stock Analysis Report
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