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Reasons Why You Should Invest in H&R Block (HRB) Stock Now

Zacks.com logo Zacks.com 11/18/2022

H&R Block, Inc. HRB is a consumer services company that has performed exceptionally well in the past year and has the potential to sustain this momentum in the near term. Consequently, if you haven’t taken advantage of its share price appreciation yet, it’s time you add the stock to your portfolio.

What Makes HRB an Attractive Pick?

An Outperformer: A glimpse of the company’s price trend reveals that the stock has had an impressive run in the past year. Shares of H&R Block have gained 71.3% against a 18.1% decline of the industry it belongs to.

H&R Block, Inc. Price

H&R Block, Inc. Price © Provided by Zacks.com H&R Block, Inc. Price

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

Solid Rank: H&R Block has a Zacks Rank #2 (Buy) and a Value Growth Momentum Score (VGM Score) of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities. Thus, the company is a compelling investment proposition at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.

Northward Estimate Revisions: The direction of estimate revisions serves as an important pointer when it comes to the price of a stock. One estimate for fiscal 2023 has moved north in the past 60 days versus no southward revision, reflecting analysts’ confidence in the company. Over the same period, the Zacks Consensus Estimate for fiscal 2023 earnings has moved up 1.1%.

Positive Earnings Surprise History: HRB has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in each of the trailing four quarters, delivering a positive average earnings surprise of 13.9%.

Strong Growth Prospects: The company has an expected long-term (three to five years) earnings per share growth rate of 12.5%. Its earnings for fiscal 2023 and 2024 are expected to improve 9.4% and 7.8%, respectively, year over year.

Growth Factors: 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 to earn sustainable revenues and operating profit growth, improve return on investments, and maintain a strong balance sheet and liquidity position.

We believe the main drivers of the company’s post-pandemic performance are the digital enablement of its business, client addition and retention in both Assisted and DIY, greater usage of AI, machine learning for product improvement, and expansion in small businesses.

Other Stocks to Consider

Some other top-ranked stocks are Booz Allen Hamilton Holding Corporation BAH, Paychex, Inc. (PAYX ) and Cross Country Healthcare, Inc. CCRN.

Booz Allen carries a Zacks Rank #2 at present. BAH has long-term earnings growth expectation of 7.5%.

Booz Allen delivered a trailing four-quarter earnings surprise of 8.8% on average.

Paychex carries a Zacks Rank of 2 at present. PAYX has long-term earnings growth expectation of 7.5%.

Paychex delivered a trailing four-quarter earnings surprise of 8.6% on average.

Cross Country Healthcare currently carries a Zacks Rank #2. CCRN has long-term earnings growth expectation of 6%.

CCRN delivered a trailing four-quarter earnings surprise of 10.1% on average.

 

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