H&R Block (NYSE: HRB) experienced a significant surge in premarket trading on Wednesday, with shares climbing 15.2% to $53.75. The jump followed the company's fiscal fourth-quarter results, which surpassed analyst expectations, and an optimistic outlook for fiscal 2027 that exceeded consensus estimates.
The tax-preparation giant reported adjusted earnings per share (EPS) of $2.38 for the fourth quarter, comfortably ahead of the FactSet consensus of $2.21. Revenue for the quarter reached $1.14 billion, up from $1.11 billion in the year-ago period and above the projected $1.12 billion.
For the full fiscal year 2026, H&R Block's adjusted net income rose 6.9% to $688.0 million, while adjusted EPS climbed 13.9% to $5.31. The company's revenue increased 4.9% to $3.945 billion, and adjusted EBITDA grew 8.3% to $1.057 billion. Operating cash flow also saw a 23% improvement compared to fiscal 2025.
A key driver behind the earnings per share growth was the company's aggressive share repurchase program. H&R Block bought back 10.5 million shares, representing 7.9% of its outstanding stock, for $500.3 million at an average price of $47.48 per share. This reduced the diluted weighted average share count by 6.2%, amplifying the impact of operational growth on per-share metrics.
Looking ahead, H&R Block issued fiscal 2027 adjusted EPS guidance in the range of $6.04 to $6.24, with a midpoint of $6.14, representing a 15.6% increase from fiscal 2026 and 4.8% above the previous consensus of $5.86. Revenue is projected to be between $4.11 billion and $4.16 billion, while adjusted EBITDA is expected to range from $1.11 billion to $1.14 billion.
The company also announced a 10% increase in its quarterly dividend to $0.46 per share, payable on October 6 to shareholders of record as of September 3. This marks another step in H&R Block's commitment to returning capital to shareholders, having already returned $713.7 million through buybacks and dividends in fiscal 2026. The board has authorized an additional $600 million for future repurchases.
Chief Executive Curtis Campbell highlighted the strategic progress, stating that fiscal 2026 provided meaningful evidence that the company's choices are strengthening its position. He pointed to a more favorable client mix and faster experimentation as key factors.
Despite the strong performance, some analysts remain cautious. The premarket price of $53.75 is 7.5% above the most optimistic existing price target of $50 from Barrington Research, and 28% higher than the average target of $42. Goldman Sachs maintains a Sell rating with a $29 target, citing risks from free-filing regulations, AI-driven competition, and pricing pressures.
With a forward P/E of 8.8 times based on premarket price and midpoint EPS guidance, and a forward dividend yield of 3.4%, H&R Block's stock appears attractively valued to some investors. However, the company's heavy reliance on U.S. tax-preparation services, which account for nearly 88% of annual revenue, remains a concentration risk. The key test ahead will be whether management can maintain margins while achieving mid-single-digit revenue growth, and whether continued buybacks at these levels will prove accretive to shareholder value.
