Reasons to Retain H&R Block (HRB) Stock in Your Portfolio

H&R Block, Inc. HRB has had an impressivae run on the bourses year to date. The stock has appreciated 10.5% against 8.7% decline of the industry it belongs to. The company has an expected long-term (three to five years) earnings per share growth rate of 12.5%.

H&R Block, Inc. Price

H&R Block, Inc. price | H&R Block, Inc. Quote

Factors That Auger Well

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 positions.

We believe that the main drivers of the company’s post-pandemic performance will be the digital enablement of its business, client addition and retention in both Assisted and DIY, greater usage of AI, and 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.

Some Risks

H&R Block has more outstanding long-term debt than cash. Cash and cash equivalent balance at the end of second-quarter fiscal 2022 was $336.3 million compared to the long-term debt level of $1.8 billion.

Zacks Rank & Other Stocks to Consider

H&R Block currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are FactSet Research Systems Inc. FDS and Cross Country Healthcare, Inc. (CCRN).

Cross Country Healthcare has an expected long-term earnings per share (three to five years) growth rate of 6.6%. CCRN has a trailing four-quarter earnings surprise of 41.5%, on average.

Cross Country Healthcare’s shares have surged 76% in the past year. CCRN sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

FactSet has an expected earnings growth rate of around 15.1% for the current year. FDS has a trailing four-quarter earnings surprise of 6.1%, on average.

FactSet shares have surged 36.9% in the past year. FDS has a long-term earnings growth of 10%. FDS carries a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.