H&R Block: Raised Guidance on Strong Earnings

H&R Block Inc. (HRB) announced strong third-quarter results on July 1 that included a big jump in earnings for the previous year. The board of directors recently approved a dividend hike and a substantial share repurchase program. The company is also aggressively paying down its debt.

H&R Block Inc. operates as a tax and investment consulting firm. Its three business segments consist of tax services, business services and financial services. The company was founded in 1946, carries a market cap. of $7.6 billion and is headquartered in Kansas City, Missouri.

Full-Year and Fourth-Quarter Results

H&R Block stepped up and delivered very impressive full-year and fourth-quarter results on June 30.

Full-year revenue rose 10% to $4.4 billion. Net income was up 21% to $454.5 million, producing earnings of $1.39 per share.

For the quarter, revenue was up 11% to $2.6 billion. Net income was $691.1 million, up 17% from the same period last year, producing earnings of $2.11 per share, outpacing analyst expectations of $2.03 per share.

The company noted that its tax services department scored a record performance, posting an 11.3% increase over the previous year.

Guidance Raised

After the encouraging results, H&R Block increased its guidance, saying it now expect full-year fiscal 2009 earnings to fall between $1.60 and $1.70 per share. Analysts are targeting the upper side of this range, projecting full-year earnings of $1.70.

Dividend Increase

The board of directors also voted to increase the company's dividend by 3 cents to 60 cents per share annually.

Debt Reduction and Share Repurchase Plan

H&R Block also noted that it now had outstanding debt of $441.2 million, down 63% and $750.5 million at the same time last year. The board also approved a share repurchase program of $2 billion to commence in 2009 and carry on through 2012.

The Chart

Shares of HRB spent most of 2007 in a steady decline, but this downward momentum now appears to have been disrupted as this stock is recoups its losses and once again is heading higher. More recently, shares have been pressuring the slight downward trend line right at $24. This is the next target, take a look at the chart below.