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Here's Why H&R Block Stock is a Compelling Pick for You Right Now
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H&R Block, Inc. (HRB - Free Report) is a tax return preparation service provider that has performed extremely well over the past year and has the potential to sustain momentum in the near term. Consequently, if you have not taken advantage of the share price appreciation yet, you should add the stock to your portfolio now.
What Makes HRB an Attractive Pick?
An Outperformer: A glimpse at the company’s price trend reveals that the stock has had an impressive run over the year. Shares of H&R Block have returned 20.3% in a year, outperforming the 3.9% rally of the industry it belongs to.
One Year Price Performance
Image Source: Zacks Investment Research
Solid Rank: HRB has a Zacks Rank #2 (Buy) and a VGM Score of A at present. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
Positive Earnings Surprise History: HRB has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, delivering an earnings surprise of 9.9%, on average.
Strong Growth Prospects: The Zacks Consensus Estimate for H&R Block’s fiscal 2025 revenues is pegged at $3.7 billion, reflecting 3.1% year-over-year growth. The consensus estimate for fiscal 2025 earnings is pegged at $5.2, hinting at a 19.5% year-over-year increase. The company has an estimated long-term (three to five years) earnings per share growth rate of 12.5%.
Growth Factors: H&R Block’s five-year strategy, Black Horizons 2025, has been successful, and it has been able to attain the three pillars of strategic imperatives in 2024. Within the Small Business imperative, HRB has observed revenue growth in Small Business tax. The net average charge (NAC) grew 3%, and Wave revenues rose 6.8%.
Within the Financial Products imperative, Spruce has resulted in increasing customer sign-ups. In the DIY channel, paid volumes grew 6% on a year-over-year basis and the NAC increased 7% in paid clients. NAC in the Assisted channel increased 4%, and client satisfaction scores enhanced. We anticipate the Block Horizons strategy to drive the company’s performance in the upcoming year as well.
The company has a strong capital allocation strategy. In August 2024, HRB announced a 17% increase in quarterly dividends. Since 2016, its dividends have increased 88%. The company’s ability to generate consistent cash flow led to a rise in dividends.
In August 2024, HRB announced a share repurchase authorization of $1.5 billion, replacing the prior authorization and displaying the board’s strategy to build more confidence in future performance. Since 2016, HRB has repurchased shares worth more than $2.3 billion, retiring above 89 million shares and greater than 40% of shares outstanding at an average price of $26.74. This strategy is driving the ongoing value for shareholders. We expect it to continue aiding the company in the future.
Image: Bigstock
Here's Why H&R Block Stock is a Compelling Pick for You Right Now
H&R Block, Inc. (HRB - Free Report) is a tax return preparation service provider that has performed extremely well over the past year and has the potential to sustain momentum in the near term. Consequently, if you have not taken advantage of the share price appreciation yet, you should add the stock to your portfolio now.
What Makes HRB an Attractive Pick?
An Outperformer: A glimpse at the company’s price trend reveals that the stock has had an impressive run over the year. Shares of H&R Block have returned 20.3% in a year, outperforming the 3.9% rally of the industry it belongs to.
One Year Price Performance
Solid Rank: HRB has a Zacks Rank #2 (Buy) and a VGM Score of A at present. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
Positive Earnings Surprise History: HRB has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, delivering an earnings surprise of 9.9%, on average.
Strong Growth Prospects: The Zacks Consensus Estimate for H&R Block’s fiscal 2025 revenues is pegged at $3.7 billion, reflecting 3.1% year-over-year growth. The consensus estimate for fiscal 2025 earnings is pegged at $5.2, hinting at a 19.5% year-over-year increase. The company has an estimated long-term (three to five years) earnings per share growth rate of 12.5%.
Growth Factors: H&R Block’s five-year strategy, Black Horizons 2025, has been successful, and it has been able to attain the three pillars of strategic imperatives in 2024. Within the Small Business imperative, HRB has observed revenue growth in Small Business tax. The net average charge (NAC) grew 3%, and Wave revenues rose 6.8%.
Within the Financial Products imperative, Spruce has resulted in increasing customer sign-ups. In the DIY channel, paid volumes grew 6% on a year-over-year basis and the NAC increased 7% in paid clients. NAC in the Assisted channel increased 4%, and client satisfaction scores enhanced. We anticipate the Block Horizons strategy to drive the company’s performance in the upcoming year as well.
The company has a strong capital allocation strategy. In August 2024, HRB announced a 17% increase in quarterly dividends. Since 2016, its dividends have increased 88%. The company’s ability to generate consistent cash flow led to a rise in dividends.
In August 2024, HRB announced a share repurchase authorization of $1.5 billion, replacing the prior authorization and displaying the board’s strategy to build more confidence in future performance. Since 2016, HRB has repurchased shares worth more than $2.3 billion, retiring above 89 million shares and greater than 40% of shares outstanding at an average price of $26.74. This strategy is driving the ongoing value for shareholders. We expect it to continue aiding the company in the future.
Other Stocks to Consider
Some other top-ranked stocks are AppLovin (APP - Free Report) and Qifu Technology, Inc. (QFIN - Free Report) .
AppLovin flaunts a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
APP has a long-term earnings growth expectation of 20%. It delivered a trailing four-quarter earnings surprise of 26.2%, on average.
Qifu Technology sports a Zacks Rank of 1 at present. It has a long-term earnings growth expectation of 20.9%.
QFIN delivered a trailing four-quarter earnings surprise of 12.4%, on average.