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VIDEOTicker Shock: Five Reasons Why H&R Block Could Mean Good Returns
Tuesday's top stories and stocks with potential to move.
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Asian stocks ended mixed. The Hang Seng was down 0.81% while the Nikkei was up 1.79%. European stocks, however, were showing me some green earlier this morning. And here in the US, we’re currently trading higher.
Here’s what I’m focused on this morning:
H&R Block (HRB):
Maybe there's some truth to that whole "death and taxes" expression. Did you happen to see the company’s fourth-quarter numbers?
In the period ended April 30, it put up $2.09 a share whereas analysts had been looking for $2.05.
Here are some other things that have me intrigued:
1. According to the release:
“Pursuant to the previously announced Board of Directors authorization to purchase up to $2.0 billion of the Company's common stock, during the fourth quarter of fiscal 2009, the Company repurchased 5.6 million shares at an aggregate price of $98.7 million, or an average price of $17.53 per share.”
That’s a lot of coin and it says the board/management thinks the stock is a good value.
2. Also per the release: “The Company intends to maintain its fiscal year 2009 dividend rate in fiscal year 2010.” This speaks for itself. 3. The company has exceeded earnings estimates in 3 of the last 4 quarters and it’s got a solid shot to do so again.
4. According to the release: “The Company expects fiscal 2010 earnings from continuing operations to be in the range of $1.60 to $1.80 per share.” That catches my eye as the estimate I’m seeing is for $1.66.
5. It trades at about 9.4 times this year’s estimate, for Pete’s sake.
I think the stock could see pretty nice returns (good pun) from this current level.
General Mills (GIS):
It looks like the company has been eating its Wheaties. According to a release last night after the bell: “The General Mills Board of Directors today declared a $0.04 increase in the quarterly dividend rate to $0.47 per share, payable August 3, 2009, to shareholders of record July 10, 2009.”
This is good news, and I’m liking the stock for the following reasons:
1. Right off the bat, I think there’s plenty management could be doing with that money. But its willingness to return it to shareholders by upping its dividend speaks volumes.
2. The company has amazing brands that just about anybody would recognize.
3. Roughly 14.2 times this year’s expected earnings is reasonable for this company.
4. I don’t want to let that big insider buy that happened earlier in the year slip my mind. That’s a nice positive that sent a good message.
For my previous take on General Mills, click here.
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