Saturday, 17 August 2024
by BD Banks
Shares of tax prep specialist H&R Block (NYSE: HRB) were soaring today after the company beat bottom-line estimates and rewarded investors with a dividend hike. As of 10:35 a.m. ET, the stock was up 18.2%.
Image source: Getty Images.
Revenue in the quarter rose 3% to $1.062 billion, beating the consensus at $1.03 billion. On the bottom line, increased spending on marketing and higher wages and benefits weighed on profits, and earnings per share (EPS) fell from $2.05 to $1.89, though that still beat estimates at $1.74.
H&R Block also raised its quarterly dividend by 17% to $0.375 a share, which is equal to a yield of 2.2%. Similarly, the company announced a new share repurchase authorization of $1.5 billion, equal to 16% of its market cap. It repurchased 8% of shares outstanding in the fourth quarter, helping to lift earnings per share and showing its commitment to returning capital to shareholders.
CEO Jeff Jones said, “In fiscal 2024 we made strides across our different products and services that provide value to our clients and help enable their financial confidence.”
H&R Block is still losing market share to online competitors like Intuit’s TurboTax. However, with a 4% revenue increase in fiscal 2024, the company is holding its own in the tax prep industry, and share buybacks have helped grow profits.
Looking ahead to the new year, the company expects revenue of $3.69 billion-$3.75 billion, up from 3% from last year. It also sees adjusted EPS of $5.15-$5.35, up from $4.41 a year ago and much better than estimates at $4.68.
Given that forecast and the guidance hike, it’s unsurprising to see the stock moving higher today.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Intuit. The Motley Fool has a disclosure policy.