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H&R Block Stock Soars 31% YTD: Is it Time to Jump Onboard?
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H&R Block, Inc. (HRB - Free Report) has delivered an impressive performance this year, with its stock surging 31%, significantly outperforming the 3% growth of the industry.
As of the latest trading session, the stock closed at $63.5, just 7% below its 52-week high of $68.45. It is trading above its 50-day moving average, indicating a bullish sentiment among investors.
Image Source: Zacks Investment Research
In comparison, HRB’s consumer services peers have not fared as well. Monro (MNRO - Free Report) has fallen 12%, while Wag! Group (PET - Free Report) has declined 59% during the same period.
Given the sustained strength of HRB shares, investors may wonder if there is still an opportunity to invest in the stock. Let’s take a closer look.
HRB’s Five-Year Strategy
H&R Block has a five-year strategy in place, known as Block Horizons 2025. The approach is focused on using human expertise and technological infrastructure to drive innovation. The strategy 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 2025 is expected to help the company deliver sustainable revenues and operating profit growth, improve return on investments, and maintain a strong balance sheet and liquidity position. The company’s revenue guidance range of $3.69 to $3.75 billion for fiscal 2025 indicates 3% year-over-year growth at midpoint. EBITDAguidance range of $975 million to $1.02 billion suggests 3.6% year-over-year growth at midpoint.
HRB is a Dividend Spinner
H&R Block has a solid history of consistently paying dividends and repurchasing shares, demonstrating its commitment to rewarding shareholders. In fiscal years 2024, 2023, and 2022, the company distributed dividends of $179.8 million, $177.9 million, and $186.5 million, respectively. During the same periods, it bought back shares worth $350.1 million, $550.2 million, and $563.2 million, respectively. These actions highlight H&R Block's focus on increasing shareholder value and its confidence in the business's long-term outlook.
The company’s strong cash position has enabled these efforts. In fact, H&R Block generated $657 million in free cash flow during the first nine months of fiscal 2024 compared to $752 million for the full fiscal year 2023. This robust cash flow provides the company with the flexibility to maintain its capital return programs.
HRB has a Strong Liquidity Position
HRB’s liquidity position is robust, with a current ratio of 1.27 at the end of the fourth quarter of fiscal 2024 compared to the industry’s 1.21. This robust liquidity reflects H&R Block’s ability to cover its immediate liabilities without strain, indicating financial stability and operational flexibility.
HRB Stock is Still Cheap
Despite the impressive rally so far, HRB’s stock remains relatively less expensive, indicating potential for further appreciation. If we look at the forward 12-month Price/Earnings ratio, HRB shares currently trade at 12.24X forward earnings, close to the industry’s 11.93X.
Image Source: Zacks Investment Research
Based on trailing 12-month EV-to-EBITDA, APP is currently trading at 9.61X below the industry’s 11.15X. Furthermore, the Relative Strength Index (RSI) shows no significant signs of overbought conditions, suggesting the stock isn't overextended.
Image Source: Zacks Investment Research
Forget FOMO, HRB is a Must-Buy
H&R Block's strategic growth initiatives, strong liquidity, shareholder-friendly policies, and attractive valuation make it a solid "Buy" for investors seeking both short-term momentum and long-term stability. The company’s continued focus on innovation and solid financial health supports a favorable outlook for further stock appreciation.
Image: Bigstock
H&R Block Stock Soars 31% YTD: Is it Time to Jump Onboard?
H&R Block, Inc. (HRB - Free Report) has delivered an impressive performance this year, with its stock surging 31%, significantly outperforming the 3% growth of the industry.
As of the latest trading session, the stock closed at $63.5, just 7% below its 52-week high of $68.45. It is trading above its 50-day moving average, indicating a bullish sentiment among investors.
In comparison, HRB’s consumer services peers have not fared as well. Monro (MNRO - Free Report) has fallen 12%, while Wag! Group (PET - Free Report) has declined 59% during the same period.
Given the sustained strength of HRB shares, investors may wonder if there is still an opportunity to invest in the stock. Let’s take a closer look.
HRB’s Five-Year Strategy
H&R Block has a five-year strategy in place, known as Block Horizons 2025. The approach is focused on using human expertise and technological infrastructure to drive innovation. The strategy 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 2025 is expected to help the company deliver sustainable revenues and operating profit growth, improve return on investments, and maintain a strong balance sheet and liquidity position. The company’s revenue guidance range of $3.69 to $3.75 billion for fiscal 2025 indicates 3% year-over-year growth at midpoint. EBITDAguidance range of $975 million to $1.02 billion suggests 3.6% year-over-year growth at midpoint.
HRB is a Dividend Spinner
H&R Block has a solid history of consistently paying dividends and repurchasing shares, demonstrating its commitment to rewarding shareholders. In fiscal years 2024, 2023, and 2022, the company distributed dividends of $179.8 million, $177.9 million, and $186.5 million, respectively. During the same periods, it bought back shares worth $350.1 million, $550.2 million, and $563.2 million, respectively. These actions highlight H&R Block's focus on increasing shareholder value and its confidence in the business's long-term outlook.
The company’s strong cash position has enabled these efforts. In fact, H&R Block generated $657 million in free cash flow during the first nine months of fiscal 2024 compared to $752 million for the full fiscal year 2023. This robust cash flow provides the company with the flexibility to maintain its capital return programs.
HRB has a Strong Liquidity Position
HRB’s liquidity position is robust, with a current ratio of 1.27 at the end of the fourth quarter of fiscal 2024 compared to the industry’s 1.21. This robust liquidity reflects H&R Block’s ability to cover its immediate liabilities without strain, indicating financial stability and operational flexibility.
HRB Stock is Still Cheap
Despite the impressive rally so far, HRB’s stock remains relatively less expensive, indicating potential for further appreciation. If we look at the forward 12-month Price/Earnings ratio, HRB shares currently trade at 12.24X forward earnings, close to the industry’s 11.93X.
Based on trailing 12-month EV-to-EBITDA, APP is currently trading at 9.61X below the industry’s 11.15X. Furthermore, the Relative Strength Index (RSI) shows no significant signs of overbought conditions, suggesting the stock isn't overextended.
Forget FOMO, HRB is a Must-Buy
H&R Block's strategic growth initiatives, strong liquidity, shareholder-friendly policies, and attractive valuation make it a solid "Buy" for investors seeking both short-term momentum and long-term stability. The company’s continued focus on innovation and solid financial health supports a favorable outlook for further stock appreciation.
HRB currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.