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Chicago, IL – May 16, 2022 – Today’s Zacks Investment Ideas feature highlights H&R Block, Inc. HRB.
This Common Tax Preparer Hits 52-Week Highs
Like animals in the wild, stocks tend to move in groups. The company owned by a stock can help us determine which industry groups dominate the market. The majority of former stock market winners belonged to leading industry groups before entering major races.
How can we identify the industries that dominate the market? Luckily for investors, our Zacks Industry Ranking simplifies the process. Zacks classifies all stocks into one of approximately 250 industry groups based on the Zacks ranking of individual stocks. The average Zacks ranking is calculated for each industry group each trading day.
We tested Zacks Industry Rank and compared how the top half (industries with the best Average Zacks Rank) and bottom half (industries with the worst Average Zacks Rank) fared against the S&P 500. This study was conducted over the ten -period of 2008-2017.
Over this period, using a one-week rebalance, the top half has beaten the bottom half by a factor of more than 2 to 1. Clearly, investing in stocks contained in major industry groups can give investors a head start on the market.
Let’s take a current example. The Zacks Consumer Services – Miscellaneous industry group is ranked in the top 38% of all Zacks-ranked industries. This means that more stocks within this industry are experiencing positive earnings estimate revisions, which is at the heart of the Zacks rankings and is the most powerful force impacting stock prices.
Quantitative research studies have shown that about half of a stock’s future price appreciation is due to its industry group.
By investing in stocks within the best groups, we can provide a constant “tailwind” to our investment success. Let’s take a look at a well-known tax preparer in this cutting-edge industry.
H&R Block, Inc.
H&R Block is the world’s largest tax filing company. HRB provides assisted tax preparation and do-it-yourself (DIY) tax preparation services to the general public. The Company offers its services through a system of retail offices primarily located in the United States, Canada and Australia. HRB also provides small business financial solutions and online access to service plans. H&R Block was founded in 1955 and is headquartered in Kansas City, MO.
HRB has exceeded earnings estimates in each of the past four quarters, posting an average earnings pace of 21.04% over that period. The tax preparation company recently released fiscal Q3 EPS earlier this week of $4.11, a surprise 17.09% from the consensus estimate of $3.51. Stocks have risen 35% this year as the market was in correction mode.
Revenue for the current fiscal year is expected to climb 55.62% to $3.32 billion over last year. Be sure to keep an eye on HRB as the stock continues to hit a string of 52-week highs.
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Past performance is not indicative of future results. The potential for loss is inherent in any investment. This document is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold any security. No recommendation or advice is given as to whether any investment is suitable for any particular investor. It should not be assumed that investments in the securities, companies, sectors or markets identified and described have been or will be profitable. All information is current as of the date hereof and is subject to change without notice. The views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management of securities. These returns come from hypothetical portfolios composed of stocks with Zacks Rank = 1 that have been rebalanced monthly without transaction fees. These are not the returns of actual stock portfolios. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for more information on the performance figures displayed in this press release.
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H&R Block, Inc. (HRB): Free Stock Analysis Report
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