Shares of H&R Block Inc. (HRB, Financial) were up 0.97% at $27.20 in pre-market trading on Tuesday after beating consensus estimates on GAAP earnings for the final quarter of fiscal 2019 by 20 cents, reporting $4.32 per share. Earnings decreased 20.4% year over year.
Revenue came in at a $2.33 billion, which was down 2.5% from the prior-year quarter but beat market expectations by $10 million.
The Kansas City, Missouri-based tax preparation company also reported financial results for full fiscal 2019.
Due to price declines in the U.S. assisted tax business, total revenues decreased 2.1% year over year to $3.1 billion. Driven by higher marketing activities and investments in technology, total operating expenses increased 3% to $2.5 billion.
Earnings before taxes declined 18.5% to $545 million and the effective tax rate jumped 1,200 basis points to 18.3%.
As a result, the net income from ongoing operations fell 29% to $445 million, Ebitda from ongoing operations also declined 15.1% to $799 million and earnings from ongoing operations decreased nearly 28% to $2.15 per diluted share.
During the year, the company invested $185 million in repurchasing 7.9 million shares of its stock and extended the authorization to repurchase additional shares of the stock until June 2022.
On July 1, H&R Block will pay a quarterly dividend of 26 cents per share to shareholders of record as of June 21. The ex-dividend date is scheduled for June 20.
The payment represents a 4% increase from the previous distribution and, if held constant, leads to a forward dividend yield of 3.86% based on the closing price of $26.94 on Monday.
H&R Block also announced it will purchase financial solutions platform Wave Financial Inc. for a total consideration of $405 million. The acquired asset will provide the company with more opportunities for organic growth.
The stock had a market capitalization of $5.48 billion at close on Monday. Following a 9% decrease for the 52 weeks through June 10, the share price is above the 200-, 100- and 50-day simple moving average lines.
The stock has underperformed the S&P 500 index by 12% over the same period. The 52-week range is $22.45 to $29.81.
The 14-day relative strength index of 51 suggests the stock is neither oversold nor overbought.
Wall Street issued a hold recommendation rating for shares of H&R Block. The average target price is $25.71, reflecting 1.9% downside from the closing price on Monday.
Disclosure: I have no positions in any securities mentioned.
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