H&R Block, Inc. Since the start of the year, HRB has had an impressive run on the stock exchanges. The stock appreciated by 10.5% against an 8.7% drop in the industry it belongs to. The company expects a long-term (three to five year) earnings per share growth rate of 12.5%.

H&R Block, Inc. Awards

H&R Block, Inc. Award | Quote from H&R Block, Inc.

Factors that bode well

H&R Block has implemented a five-year strategy called Block Horizons. 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-focused mobile 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 generate sustainable revenue and operating profit growth, improve return on investment, and maintain a strong balance sheet and liquidity.

We believe the key drivers of the company’s post-pandemic performance will be the digital activation of its business, the addition and retention of customers in the Assisted and DIY domains, greater use of AI and the machine learning for product improvement and expansion in small businesses.

H&R Block has a consistent track record of returning capital to shareholders through dividends and share buybacks. The company paid $195.1 million, $204.9 million and $205.5 million as dividends in fiscal years 2021, 2020 and 2019, respectively. It repurchased shares worth $191.3 million, $256.2 million and $189.9 million, respectively, in 2021, 2020 and 2019.

Some risks

H&R Block has more long-term debt than cash. The cash and cash equivalents balance at the end of the second quarter of fiscal year 2022 was $336.3 million compared to the long-term debt level of $1.8 billion.

Zacks Ranking and Other Stocks to Consider

H&R Block currently wears a Zacks rank #3 (Hold).

Some Higher-Ranking Stocks in the Broader Zacks Business services sector are FactSet Research Systems Inc. MSDS and Cross Country Healthcare, Inc. (CCRN).

Cross Country Healthcare has a long-term (three to five year) expected earnings per share growth rate of 6.6%. CCRN has a four-quarter earnings surprise of 41.5%, on average.

Shares of Cross Country Healthcare have jumped 76% in the past year. CCRN sports a Zacks Rank #1 (Strong Buy). You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

FactSet forecasts an earnings growth rate of around 15.1% for the current year. FDS has a surprise on earnings for the last four quarters of 6.1% on average.

FactSet shares have jumped 36.9% over the past year. FDS has a long-term earnings growth of 10%. FDS wears a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.