H & R Block Inc (NYSE:HRB) was collecting upgrades on Wednesday morning after releasing its earnings for its fourth quarter of the fiscal year. The outfit, which makes tax preparation software, managed to beat expectations on both EPS on revenue in the report it released on Tuesday afternoon.
Shares in the firm were some of the best performers on Wall Street on Wednesday morning. At time of writing H & R Block stock was selling for $29.65, up 9.84 percent on yesterday’s close. The response to the firm’s earnings report was shared by analysts as well as traders. Increases in the price target on H & R Block stock was the call of the day.
Despite those price increases, however, many analysts are keeping a more negative outlook on the firm in the short and medium term.
H & R Block upgrades fly in
The high water mark for H & R Block Inc (NYSE:HRB) on Wednesday came from Jeffery Lee at Credit Suisse. He reckons the firm’s shares are worth $29 each, a number they passed this morning. The rest of Wall Street is less optimistic. Shareholders will be happy, at least, that they’re less pessimistic than yesterday.
Morgan Stanley, which rated H & R Block stock at Equal weight, said that the firm’s shares are worth $27. That was an increase from $24, but the bank doesn’t suggest traders put too much emphasis on these earnings.
Mark Palmer of BTIG says that the firm’s massive rally is a result of slower decline in users, and political risks from the Trump administration lowering. Mr. Palmer believes that if the current President were to enact tax reform it could negatively impact H & R Block stock.
It’s not clear what the mechanics of such an effect would be. Perhaps if President Trump greatly simplified the tax code, something few commentators see as his objective, H & R Block would lose customers. Mr. Palmer set his price target on the stock at $19, well below this morning’s price.
Watching H & R Block move
H & R Block Inc (NYSE:HRB) stock has never been the sexiest thing on Wall Street. The company makes accounting software, not electric cars or iPhones. The firm’s share price collapsed in early 2016 and traded flat for most of last year. It wasn’t until 2017 began the “Trump Trade” that the firm’s stock started to gain once more.
Since the start of the year the firm’s shares have increased in value by more than 25 percent. Today’s big move is based on real, solid numbers, and Wall Street rewards that. The firm is paying out a higher dividend and its growth path looks strong. With so many research firms deciding that now is the time to raise price targets, the outlook for those holding onto H & R Block stock has certainly improved.
On Tuesday H & R Block Inc (NYSE:HRB) revealed that its earnings per share for the three months came in at $3.75. Revenue for the full period came in at $2.32 billion. What may have been the most exciting to investors, however, was the decision to raise the dividend. The firm’s quarterly dividend will rise from 22 cents right now to 24 cents going forward.