H&R Block: Taxing returns
Tax season, and potential changes to the tax code, bode well for this tax preparation firm.
One certain result of the political horse-trading now in full swing in Washington is a change to the tax code. And depending on negotiations, the changes could be extensive.
One firm that could benefit from yet another tax overhaul is H&R Block (HRB). The company is one of the world's largest tax-services providers. And the stock is a holding in our Editor's Portfolio.
Block's reach is impressive:
- Block prepares one in every seven U.S. tax returns.
- The firm has a retail office within five miles of most Americans.
- Block files one in every five Earned Income Tax Credits.
Block stock is also benefiting from improved results in recent quarters. The firm has beaten Wall Street's consensus earnings estimates in each of the last two quarters.
For fiscal 2013 ending in April, the consensus profit estimate is $1.68 per share, up from $1.28 in the year earlier. Growth should continue in fiscal 2014, with the current estimate of $1.82 per share.
The stock is also benefiting from investors' thirst for dividends. H&R Block stock currently yields more than 4%.
Despite the hefty yield, the annual indicated dividend of $0.80 per share seems well covered by earnings. In fact, a dividend hike would not be surprising in 2013.
Block stock has had its ups and downs over the years. The firm's foray into mortgages ended rather badly, which hurt these shares. The stock traded in the $30s in 2004 and 2005 and the high $20s in 2008, so the shares have plenty of upside potential.
Also enhancing potential is the takeover prospects of the company, although these shares have merit even if no takeover develops.
Because of the stock's volatile track record, these shares are not for conservative investors. But more aggressive investors looking for a nice combination of yield and growth potential, not to mention a stock with some interesting catalysts in 2013, should give these shares special consideration.
More from TheStockAdvisors.com
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
New study finds members of this global elite are stashing an average $600 million each in cash -- 10 times more than a year ago.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.