Fiserv Benefits From Acquisitions Despite Increased Competition

H&R Block, Inc. HRB has performed exceptionally well in the past year and has the potential to sustain this momentum in the near term. Consequently, if you haven’t taken advantage of its share price appreciation yet, it’s time you add the stock to your portfolio.

What Makes HRB an Attractive Pick?

An Outperformer: A glimpse at this consumer services company’s price trend reveals that the stock has had an impressive run over the past year. Shares of H&R Block have gained 22%, significantly outperforming the 8% growth of the industry it belongs to.

H&R Block, Inc. Price

H&R Block, Inc. price | H&R Block, Inc. Quote

Solid Rank and VGM Score: H&R Block has a Zacks Rank #2 (Buy) and a VGM Score of A. Our research shows that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best investment opportunities for investors. Thus, the company is a compelling investment proposition at the moment.

Northward Estimate Revisions: One estimate for fiscal 2025 has moved north in the past 30 days versus no southward revision. The Zacks Consensus Estimate for HRB’s fiscal 2025 earnings has increased 0.6% in the past 30 days.

Strong Growth Prospects: The company has an expected long-term (three to five years) earnings per share growth rate of 12.5%. Its fiscal 2025 earnings are expected to improve 19.7% year over year.

Positive Earnings Surprise History: HRB has an impressive earnings surprise history. The company outpaced the Zacks Consensus Estimate in all the trailing four quarters, delivering an average earnings surprise of 9.9%.

Growth Factors: H&R Block’s focus on providing essential services like tax preparation and financial advice ensures its relevance even during economic downturns. This stability appeals to investors seeking defensiveness in their portfolios.

H&R Block has a solid history of consistently paying dividends and repurchasing shares, demonstrating its commitment to rewarding shareholders. In fiscal 2024, 2023 and 2022, the company distributed dividends of $179.8 million, $177.9 million and $186.5 million, respectively. During the same periods, it bought back shares worth $350.1 million, $550.2 million and $563.2 million, respectively. These actions highlight H&R Block's focus on increasing shareholder value and confidence in the business' long-term outlook.

Other Stocks to Consider

Some other top-ranked stocks are RB Global, Inc. RBA and Verisk Analytics VRSK.

RB Global carries a Zacks Rank of 2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

RBA has a long-term earnings growth expectation of 10.6%. It delivered a trailing four-quarter earnings surprise of 16.3%, on average.

Verisk Analytics carries a Zacks Rank of 2 at present. It has a long-term earnings growth expectation of 12%. VRSK delivered a trailing four-quarter earnings surprise of 4.2%, on average.

Zacks Investment Research

Thursday, November 21, 2024

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Broadcom Inc. (AVGO), Merck & Co., Inc. (MRK) and Qualcomm Inc. (QCOM), as well as a micro-cap stock, Natural Health Trends Corp. (NHTC). These research reports have been hand-picked from roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Broadcom’s shares have outperformed the Zacks Electronics - Semiconductors industry over the last two years (+208.0% vs. +157.2%). The Zacks analyst believes that strong demand for the company’s networking products are suitable for addressing the needs of an increasing AI workload and the growing need for fast networking in data centers. The acquisition of VMware has also been a plus.

However, a highly competitive market and a relatively low customer base have remained causes for concern. Also, Broadcom’s frequent acquisitions, like that of VMWare, have escalated integration risks.

(You can read the full research report on Broadcom here >>>)

Merck’s shares have underperformed the Zacks Large Cap Pharmaceuticals industry over the past two years (-8.8% vs. +15.2%). The Zacks analyst believes that generic competition for several drugs and rising competitive pressure, mainly on the diabetes franchise, will continue to be overhangs for the company. Also, there are concerns about Merck’s ability to grow its non-oncology business ahead of Keytruda’s loss of exclusivity later in the decade.

Yet, with continued label expansion into new indications, particularly earlier-stage launches, Keytruda is expected to see continued growth. Animal health and vaccine products have also been core growth drivers.

(You can read the full research report on Merck here >>>)

Shares of Qualcomm have underperformed the Zacks Wireless Equipment industry over the past year (+21.0% vs. +43.2%). Per the Zacks analyst, a shift in the shares among OEMs at the premium tier has reduced Qualcomm's near-term opportunity to sell integrated chipsets from its Snapdragon platform.

Aggressive competition in the mobile phone chipset market is also likely to hurt Qualcomm's profits in the future. High operating expenses and R&D costs have remained a headwind. Qualcomm is also expected to face softness in demand from China.

However, with the accelerated rollout of 5G technology, it is benefiting from investments toward building a licensing program in the mobile space. The company formed a strategic collaboration with Google to develop Generative AI digital cockpit solutions.

(You can read the full research report on QUALCOMM here >>>)

Shares of Natural Health Trends have underperformed the Zacks Consumer Products - Discretionary industry over the past year (+1.8% vs. +21.4%). Per the Zacks analyst, a declining active member base remains the biggest concern for the company. It faces liquidity challenges and high operating expenses. Dependency on key markets and intense competition pose additional risks.

However, expansion into new markets and improvement in cost management bode well.

(You can read the full research report on Natural Health Trends here >>>)

Other noteworthy reports we are featuring today include Shopify Inc. (SHOP), Fiserv, Inc. (FI) and Marsh & McLennan Companies, Inc. (MMC).

Mark Vickery

Senior Editor

Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>

Today's Must Read

Keytruda to Remain Merck's (MRK) Key Top-Line Driver

Strong Demand for Networking Products Aids Broadcom (AVGO)

Qualcomm (QCOM) Poised to Gain from Transition to Edge Firm

Featured Reports

Fiserv (FI) Gains From Skytef Buyout, Amid High Competition

Per the Zacks analyst, the Skytef acquisition strengthens Fiserv's distribution network and point-of-sale. High competition from other players is an overhang.

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Quanta (PWR) Benefits From Strong Demand Amid Labor Woes

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Ongoing Menu Expansion Aids QIAGEN (QGEN), Macro Woes Stay

Per the Zacks analyst, QIAGEN's robust R&D spending to expand the testing menu across key platforms is encouraging. Yet, macroeconomic volatilities, including the challenges in China, raise concerns.

New Upgrades

Corcept (CORT) Rides on Robust Korlym Sales Performance

Per the Zacks analyst, Corcept's sole drug, Korlym, approved for treating Cushing's syndrome, is driving the top-line. The company is also making good progress with its promising pipeline candidates.

Focus on Cost Savings to Bolster McCormick's (MKC) Margins

Per the Zacks analyst, McCormick's focus on cost-saving plans will continue to enhance its margins. The company expects its fiscal 2024 gross margin to increase by 50 to 100 basis points.

Product Rollouts & Growing Merchant Base Aid Shopify (SHOP)

Per the Zacks analyst, Shopify is benefiting from expanding merchant base driven by applications like Shopify Bill Pay, Tax platform, Collective and Marketplace Connect solutions.

New Downgrades

Decline in Vehicle Production, Rising Debt Ail Magna (MGA)

Per the Zacks analyst, lower-than-anticipated vehicle production in North America and Europe is likely to hurt Magna's top-line growth. Rising debt levels are also concerning.

High Costs, Falling Revenues Hurt Affiliated Managers (AMG)

Per the Zacks analyst, weak top-line performance, and elevated costs are major near-term headwinds for Affiliated Managers. The presence of substantial intangible assets on its balance sheet is a woe.

Spectrum Brands (SPB) Struggles With Numerous Headwinds

Per the Zacks analyst, Spectrum Brands has been witnessing geopolitical and macroeconomic uncertainty for a while. In addition, foreign currency translations are acting as deterrents.

Zacks Investment Research