H&R Block (HRB) Beats Q4 Earnings and Revenue Estimates

H&R Block, Inc. HRB reported better-than expected fourth-quarter fiscal 2019 results.

Earnings per share from continuing operations came in at $4.32, surpassing the Zacks Consensus Estimate by 21 cents but decreasing 20.4% year over year. The decline was mainly due to increase in expenses.

Revenues of $2.33 billion surpassed the consensus mark by $16 million but decreased 2.5% year over year. The decline was largely due to lower Assisted tax preparation revenues.

H&R Block, Inc. Revenue (TTM)

H&R Block, Inc. Revenue (TTM)

H&R Block, Inc. revenue-ttm | H&R Block, Inc. Quote

 

Shares of H&R Block have gained 11.4% year to date, underperforming the 13.9% increase of the Zacks S&P 500 composite.

 

Other Quarterly Numbers

Total operating expenses of $1.2 billion were up 3.4% year over year owing to higher technology, marketing and advertising spend.

H&R Block exited the quarter with cash and cash equivalents of $1.6 billion compared with $203.2 million at the end of the prior quarter. Long-term debt was around $1.5 billion at the end of the quarter. The company generated roughly 2 billion of cash from operating activities and spend $15.5 million on capex.

The company paid dividends of $50.1 million in the quarter. It announced a 4% increase in its quarterly dividend to 26 cents per share. A cash dividend of 26 cents per share is payable Jul 1, 2019 to shareholders of record on Jun 21, 2019.

During the fourth quarter, H&R Block repurchased 3.2 million shares for $75 million. It announced a three-year extension of share repurchase authorization. Roughly $1.0 billion remains under the authorization, which now expires in June 2022.

Acquisition Announcement

Concurrent with the earnings release, H&R Block announced that it has entered into an agreement to acquire financial solutions platform, Wave Financial Inc. The company will buy all outstanding shares of Wave for $405 million in cash. The transaction is expected to be completed in the next few months.

Zacks Rank & Stocks to Consider

H&R Block currently carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the broader Zacks Business Services sector are Navigant Consulting NCI, FLEETCOR Technologies FLT and NV5 Global NVEE. While Navigant Consulting sports a Zacks Rank #1 (Strong Buy), FLEETCOR and NV5 Global carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term expected EPS (three to five years) growth rate for Navigant Consulting, FLEETCOR and NV5 Global is 13.5%, 15.4% and 20%, respectively.

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