European Investor
12 Aug 2026, 09:12
H&R Block Stock Jumps 14.5% as Earnings Growth, Strong FY2027 Outlook and Dividend Hike Impress Investors
H&R Block (NYSE: HRB) shares surged 14.5% in premarket trading Wednesday after the tax-preparation company reported solid fiscal 2026 growth, issued a strong fiscal 2027 outlook and raised its quarterly dividend by 10%.
The sharp rally appears to reflect a combination of improving profitability, strong cash generation, aggressive share repurchases and an outlook pointing to another year of earnings growth.
Revenue Growth Accompanied by Faster Earnings Expansion
Fiscal 2026 revenue increased 4.9% to $3.95 billion, driven primarily by higher average charges and volume in U.S. assisted tax preparation, along with growth in international operations and the company's Wave business.
Profit growth significantly outpaced revenue. Net income from continuing operations increased 20.8% to $736.3 million, while EPS rose 28.7% to $5.69. Results included a one-time $84.1 million tax benefit, equivalent to $0.65 per share.
Excluding adjustments, underlying earnings growth remained healthy. Adjusted net income increased 6.9% to $688 million, while adjusted EPS rose 13.9% to $5.31, helped by higher earnings and a lower share count.
Operating cash flow also increased 23%, strengthening H&R Block's capacity to return capital to shareholders.
Share Buybacks and Dividend Increase Support the Rally
Capital returns remain an important part of H&R Block's investment case.
The company returned $713.7 million to shareholders during fiscal 2026 through dividends and share repurchases. It bought back approximately 10.5 million shares for $500.3 million, reducing shares outstanding by 7.9%.
H&R Block still has approximately $600 million available under its $1.5 billion repurchase authorization.
At the same time, the board increased the quarterly dividend by 10% to $0.46 per share, marking the company's ninth consecutive annual dividend increase.
The combination of buybacks and dividend growth helps explain why EPS is expanding considerably faster than revenue and provides an additional catalyst for the stock.
FY2027 Outlook Points to Further Earnings Growth
H&R Block expects fiscal 2027 revenue of $4.11 billion to $4.16 billion, representing continued growth from fiscal 2026's $3.95 billion.
Adjusted EBITDA is projected between $1.11 billion and $1.14 billion, while adjusted diluted EPS is expected to reach $6.04 to $6.24.
At the midpoint of $6.14, adjusted EPS would increase approximately 15.6% from fiscal 2026's $5.31, extending the company's double-digit per-share earnings growth despite its relatively moderate top-line expansion.
H&R Block's 14.5% premarket rally therefore appears supported not by a single headline number, but by the combination of improving operating performance, strong cash generation, substantial buybacks, a higher dividend and an FY2027 outlook indicating that double-digit adjusted EPS growth can continue.
H&R Block (NYSE: HRB) shares surged 14.5% in premarket trading Wednesday after the tax-preparation company reported solid fiscal 2026 growth, issued a strong fiscal 2027 outlook and raised its quarterly dividend by 10%.
The sharp rally appears to reflect a combination of improving profitability, strong cash generation, aggressive share repurchases and an outlook pointing to another year of earnings growth.
Revenue Growth Accompanied by Faster Earnings Expansion
Fiscal 2026 revenue increased 4.9% to $3.95 billion, driven primarily by higher average charges and volume in U.S. assisted tax preparation, along with growth in international operations and the company's Wave business.
Profit growth significantly outpaced revenue. Net income from continuing operations increased 20.8% to $736.3 million, while EPS rose 28.7% to $5.69. Results included a one-time $84.1 million tax benefit, equivalent to $0.65 per share.
Excluding adjustments, underlying earnings growth remained healthy. Adjusted net income increased 6.9% to $688 million, while adjusted EPS rose 13.9% to $5.31, helped by higher earnings and a lower share count.
Operating cash flow also increased 23%, strengthening H&R Block's capacity to return capital to shareholders.
Share Buybacks and Dividend Increase Support the Rally
Capital returns remain an important part of H&R Block's investment case.
The company returned $713.7 million to shareholders during fiscal 2026 through dividends and share repurchases. It bought back approximately 10.5 million shares for $500.3 million, reducing shares outstanding by 7.9%.
H&R Block still has approximately $600 million available under its $1.5 billion repurchase authorization.
At the same time, the board increased the quarterly dividend by 10% to $0.46 per share, marking the company's ninth consecutive annual dividend increase.
The combination of buybacks and dividend growth helps explain why EPS is expanding considerably faster than revenue and provides an additional catalyst for the stock.
FY2027 Outlook Points to Further Earnings Growth
H&R Block expects fiscal 2027 revenue of $4.11 billion to $4.16 billion, representing continued growth from fiscal 2026's $3.95 billion.
Adjusted EBITDA is projected between $1.11 billion and $1.14 billion, while adjusted diluted EPS is expected to reach $6.04 to $6.24.
At the midpoint of $6.14, adjusted EPS would increase approximately 15.6% from fiscal 2026's $5.31, extending the company's double-digit per-share earnings growth despite its relatively moderate top-line expansion.
H&R Block's 14.5% premarket rally therefore appears supported not by a single headline number, but by the combination of improving operating performance, strong cash generation, substantial buybacks, a higher dividend and an FY2027 outlook indicating that double-digit adjusted EPS growth can continue.
