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H&R Block (HRB) Up 1.3% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for H&R Block (HRB). Shares have added about 1.3% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is H&R Block due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

H&R Block Beats Q4 Earnings Estimate

H&R Blockreported 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.

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.

How Have Estimates Been Moving Since Then?

Fresh estimates followed an upward path over the past two months.

VGM Scores

At this time, H&R Block has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

H&R Block has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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