H&R Block (HRB) Banks on Five-Year Strategy Amid Cost Pressures
H&R Block, Inc. HRB shares have appreciated 24.1% over the past year against 37% decline of the industry it belongs to.
The company recently reported third-quarter fiscal 2022 adjusted earnings per share of $4.11 that beat the Zacks Consensus Estimate by 17.1% and surged more than 100% year over year. Revenues of $2.1 billion surpassed the consensus estimate by 6.6% but dropped 11.4% year over year.
H&R Block, Inc. Price
H&R Block, Inc. price | H&R Block, Inc. Quote
How is H&R Block Doing?
H&R Block has a five-year strategy called Block Horizons in place. The strategy is focused on using human expertise and technological infrastructure to drive innovation. It 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 is expected to help the company deliver sustainable revenues and operating profit growth, improve return on investments, and maintain strong balance sheet and liquidity position.
We believe the main drivers of the company’s post-pandemic performance will be digital enablement of its business, client addition and retention in both Assisted and DIY, greater usage of AI, machine learning for product improvement, and expansion in small business.
H&R Block has a consistent track record of returning capital to shareholders through dividends and share repurchases. The company paid $195.1 million, $204.9 million and $205.5 million as dividends in the fiscal years 2021, 2020 and 2019, respectively. It repurchased shares worth $191.3 million, $256.2 million and $189.9 million, respectively, in 2021, 2020 and 2019.
H&R Block’s current ratio at the end of the March-quarter was pegged at 1.1, lower than the current ratio of 1.77, reported at the end of the prior-year quarter. Decreasing current ratio is not desirable as it indicates that the company may have problems meeting its short-term obligations.
H&R Block is witnessing escalation in costs as it is investing heavily in technology and operations. Operating expenses of $1.2 billion were up 4% year over year in the last-reported quarter. These expenses of $2.6 billion increased 3.2% year over year in fiscal 2021.
Zacks Rank & Stocks to Consider
H&R Block currently carries a Zacks Rank #3 (Hold).
Some top-ranked stocks in the broader Zacks Business Services sector are Cross Country Healthcare CCRN and Clean Harbors CLH.
Cross Country Healthcare sports a Zacks Rank #1 (Strong Buy). The company has a long-term earnings growth of 6.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cross Country Healthcare pulled off a trailing four-quarter earnings surprise of 29.2%, on average. CCRN’s shares have declined 15.9% year to date.
Clean Harbors carries a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 35.8%, on average.
CLH’s shares have declined 11.5% year to date.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
H&R Block, Inc. (HRB) : Free Stock Analysis Report
Clean Harbors, Inc. (CLH) : Free Stock Analysis Report
Cross Country Healthcare, Inc. (CCRN) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
