Headquartered in Kansas City, MO, H&R Block (HRB) is a global consumer tax services provider. They have approximately 12,000 company-owned and franchise retail locations and 9,000 bilingual tax professionals and client service professionals in the US, other US territories, and on US military bases around the world. An H&R Block office is located within five miles of most Americans in addition to their online solutions.
The company reported excellent results earlier this month as they appear to be benefitting from tightening labor markets and improving wages. Their Q4 FY 2017 ended Apr 30 adjusted earnings were $3.76 per share, ahead of the Zacks Consensus Estimate of $3.51.
"With competitive promotions, impactful marketing and an improved client experience, we achieved this goal and also produced strong financial results, all during a year in which the industry experienced a decline in returns," said the CEO.
Estimates have gone up significantly after excellent results. Zacks Consensus Estimates for the current and next year have gone up to $2.00 per share and $2.05 per share from $1.81 and $1.87 respectively, before the results. Rising estimates sent the stock back to a Zacks Rank #1 (Strong Buy).
H&R Block, Inc. Price and Consensus
Return Capital to Shareholders
The company continues to return cash to shareholders via dividends and share buybacks. With the results, they announced an increase in their quarterly dividend by 9%. This was a significant increase in their quarterly dividend for the second year in a row.
Since 2005, their dividends per share have grown at 6% CAGR, even though there were no dividend increases in FY14, FY15 and a portion of FY16 due to savings and loan holding company regulatory constraints.
The company has been paying quarterly dividends to its shareholders since going public in 1962. Their current dividend yield is 3.1%.
The Bottom Line
HRB is a Zacks Rank #1 (Strong Buy) stock with Zacks Style Scores of "A" for Value as well as Growth and "B" for Momentum, with a VGM Score of "A". It looks pretty good from industry and sector rank perspective look, which are in the top 8% and 31% respectively.
Going forward, they should also benefit from tax reforms promised by the Trump administration.
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