As the saying goes, in life there are two things you can be sure of: death and taxes.
If you concur with this perspective, you might want to consider an investment in H&R Block (HRB
), the world’s largest tax preparation business which reported fourth quarter results earlier this week.
In the fourth quarter which ended 30 April 2010, H&R Block (HRB
) saw earnings of $479 million which equates to $1.43 a share. This is compared to the $513 million or $1.53 per share in the previous year, for a decline of just 6.5%. Total revenues declined 5.1 percent to $3.9 billion. This is a decent result given the economic recession witnessed in the United States and globally, which resulted in fewer people being required to report taxes due to large job losses.
The company was also in a healthy cash position with $1.8 billion in cash on the balance sheet and $587 million being generated from operating activities.
The share trades on an historical price to earnings multiple of around 10.6 times earnings and a healthy 3.8% dividend yield.
Established in 1955 by Henry and Richard Block, the company now fills one of every seven tax returns in the US and has a presence in America, Canada and Australia.
Apart from the dividend declared, management at the company was also an active buyer of the company's shares as part of a repurchase program which saw it spend $250 million buying back 12.8 million shares including 6 million in the fourth quarter alone.
Dividends have also been an important part of the strategy for H&R Block (HRB
) with the company not skipping a quarterly dividend since 1978 and having had four stock splits over the last 30 years.
Going forward, company management is cautious about the outlook: "Our business results reflect the challenging economic conditions of this tax season, caused by record levels of sustained unemployment that led to fewer returns being filed by our core retail tax client base," said Russ Smyth, H&R Block's (HRB
) President and CEO.
If you are an investor who resents having to fork out for taxes each year, then H&R Block (HRB
) at least provides you with an opportunity to profit from somebody else’s, and your own, tax frustration!
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