What happened
Shares of H&R Block(NYSE: HRB) soared 11.1% higher this week, as of Friday at 2 p.m. ET, according to S&P Global Market Intelligence. The stock had been down as much as 11.5% during the week.
H&R Block is now trading at just over $39 per share, up about 7.3% year to date. It outperformed the markets, which were down this week. The S&P 500 was off 2.2%, while the Dow Jones Industrial Average dropped 2.3% and the Nasdaq Composite fell 2.7% as of 2 p.m. ET. on Friday.
So what
H&R Block, a leading tax preparer, got a boost this week following the release of its fourth-quarter earnings report. The company beat revenue and earnings estimates and raised its dividend.
For the fourth quarter, ended June 30, Block posted $1.03 billion in revenue, down from $1.05 billion a year ago. About $637 million of that came from assisted tax preparation, while $132 million came from do-it-yourself tax prep. Net income was $302 million, up from $223 million in the year-ago quarter. Operating expenses were down 11% year over year to $656 million.
For the full year, it had $3.47 billion in revenue, up slightly year over year from $3.46 billion. Net income was $554 million for the year, the same as the previous year.
The company ended the fiscal year with $978 million in cash and equivalents, up from $885 million the previous year. It had free cash flow of $851 million.
This facilitated a 10% dividend increase to $0.32 per share per quarter. It marks the seventh straight year of dividend increases. The company is also in the middle of a $1.25 billion share-repurchase plan that runs through fiscal year 2025. It has $700 million in share repurchases remaining.
Now what
The tax preparer also posted its outlook for fiscal 2024, and it was better than analysts anticipated. It calls for revenue to be in the range of $3.53 billion to $3.585 billion. Those numbers would be up from the $3.47 billion in fiscal 2023. Also, earnings before interest, taxes, depreciation, and amortization (EBITDA) are expected to be between $930 million and $965 million, which would be up from $915 million in fiscal 2023.
Lastly, adjusted diluted earnings per share are projected to be in the range of $4.10 to $4.30, which is higher than the fiscal 2023 number of $3.82.
These projections, along with a reasonable price-to-earnings ratio of 10.9, make this a stock to consider. Also, the dividend is strong with a 3.3% yield and a 38% payout ratio.
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Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
