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H&R Block (HRB) has quietly been trading to new all-time highs this week. We have been keeping an eye on HRB to see if it would break above or below its multi-month trading range. From mid-November to early May, it traded in a pretty narrow $45-50 range. However, its strong Q3 (Mar) earnings report on May 9 has pushed the stock to break above that trading range, which is typically a good sign for further potential gains.

• HRB reminds us a bit of Intuit (INTU). Both are mostly known for the tax preparation offerings but have smartly leverages their brand equity and branched into adjacent areas. With Intuit, it is best known for its Turbo Tax software and its QuickBooks accounting platform, but in recent years it has branched into Credit Karma (credit services, personal loans) and Mailchimp (email and online marketing). Of note, INTU recently shut down its Mint offering and said users should migrate to Credit Karma.
• Similarly, H&R Block is best known for its tax prep services, although more on the assisted side whereas Turbo Tax is DIY. However, investors may not realize it also offers financial products, and small business systems. Through Block Advisors and Wave, the company helps small business owners with bookkeeping, payroll, advisory, and payment processing services. It also operates a mobile banking app, Spruce. H&R Block also has a growing DIY tax prep offering.
• On May 9, HRB posted a huge EPS beat with more modest revenue upside. And based on how it ended tax season and its Q3 performance, HRB now expects to finish the year near the high end of its outlook. HRB said there were many things to be pleased about in the quarter, from its strong DIY performance, virtual tax growth, and positive trends in small business. HRB also cited important progress for both Spruce and Wave.
• In particular, its paid DIY growth significantly outpaced the DIY category. Something that stood out to us was HRB saying that paid volumes thru April 30 grew 6% and many of these filers came from TurboTax. And at the same time, customer satisfaction metrics, including ease of use and price per service, improved. In addition, HRB focused on curated experiences to help self-employed workers feel more confident in their tax outcomes, which resulted in notable increases among those filers.
• Another thing about H&R Block is that it has a been a long time member of our Yield Leaders rankings, which means management has been good about buying back shares. In our latest report, HRB posted a huge buyback yield of 10.1% plus it pays a 2.3% dividend yield, for a total Shareholders Yield of 12.4%. In Q1-Q2, HRB repurchased $350 mln, or another 5.5% of shares outstanding. However, it did not buy back shares in Q3.

Overall, it is a slow news day, so we wanted to flag H&R Block. We like that it recently broke above a multi-month trading range. Also, its comment about many of its DIY filers coming over from Turbo Tax was piqued our interest. And the company has been great about buying back shares in recent years. We also think its strategy of moving into adjacent areas and leveraging the trusted H&R Block name makes a lot of sense.