H&R Block (HRB) Stock Surging on Fiscal 2015 Revenue Growth

NEW YORK (TheStreet) -- Shares of H&R Block (HRB) are surging 3.39% to $32.30 after the U.S. tax services provider reported a revenue increase in fiscal 2015 for the third consecutive year.

For the fiscal year that ended April 30, the company reported revenue of $3.08 billion, up 1.8% from $3.02 billion in fiscal 2014.

"Our DIY products had a very strong year, increasing revenues, return counts, and market share," CEO Bill Cobb said in a conference call with analysts.

However, net income for the 12-month period fell to $487 million, or $1.75 per share, compared to net income of $500 million, or $1.81 cents per share in the same quarter a year ago.

The Missouri-based company was expected to earn $1.73 per share on revenue of $3.09 billion for the fiscal year 2015, according to analysts polled by Thomson Reuters.

Separately, TheStreet Ratings team rates BLOCK H & R INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate BLOCK H & R INC (HRB) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, good cash flow from operations, compelling growth in net income and increase in stock price during the past year. We feel its strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • HRB's very impressive revenue growth greatly exceeded the industry average of 7.5%. Since the same quarter one year prior, revenues leaped by 154.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Diversified Consumer Services industry and the overall market, BLOCK H & R INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Consumer Services industry. The net income increased by 82.8% when compared to the same quarter one year prior, rising from -$214.71 million to -$36.95 million.
  • Net operating cash flow has slightly increased to -$619.62 million or 1.32% when compared to the same quarter last year. In addition, BLOCK H & R INC has also vastly surpassed the industry average cash flow growth rate of -342.31%.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • You can view the full analysis from the report here: HRB Ratings Report

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