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H&R Block (HRB)
NYSE:HRB
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H&R Block
(NYSE:HRB)
61Neutral
Positive Factors
Financial Performance
Full-year guidance was reaffirmed, indicating confidence in the company's future performance.
Investment Rating
The OUTPERFORM investment rating and $70 price target represent nearly 30% upside from current levels.
Stock Valuation
The stock is trading at a discount compared to both its five-year average and its industry peers, suggesting potential for price appreciation.
Negative Factors
Profitability
The adjusted loss per share increased 36.2% from the previous year, indicating a decline in profitability.
Revenue Performance
Revenues were flat year-over-year in the second quarter, slightly below estimates.
H&R Block (HRB) vs. S&P 500 (SPY)
Market Cap
$7.24B
Dividend Yield2.57%
Average Volume (3M)1.78M
Price to Earnings (P/E)14.5
Beta (1Y)0.37
Revenue Growth3.77%
EPS Growth-2.16%
CountryUS
Employees4,200
SectorConsumer Cyclical
Sector Strength51
IndustryPersonal Services
Share Statistics
EPS (TTM)3.63
Shares Outstanding133,849,260
10 Day Avg. Volume2,597,725
30 Day Avg. Volume1,775,967
Financial Highlights & Ratios
PEG Ratio0.96
Price to Book (P/B)N/A
Price to Sales (P/S)1.94
Price to Cash Flow (P/CF)-3.10
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$70.00Price Target Upside29.75% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
H&R Block Business Overview & Revenue Model
Company DescriptionH&R Block, Inc., through its subsidiaries, provides assisted income tax return preparation and do-it-yourself (DIY) tax return preparation services and products to the general public primarily in the United States, Canada, and Australia. The company offers assisted income tax return preparation and related services through a system of retail offices operated directly by the company or its franchisees. It also provides Refund Transfers and H&R Block Emerald Prepaid Mastercard, which enables clients to receive their tax refunds; Peace of Mind extended service plans; H&R Block Emerald Advance lines of credit; Tax Identity Shield that provides clients assistance in helping protect their tax identity and access to services to help restore their tax identity; refund advance loans; H&R Block Instant Refund; and H&R Block Pay With Refund services. In addition, the company offers small business financial solutions through its company-owned or franchise offices, and online. H&R Block, Inc. was founded in 1955 and is headquartered in Kansas City, Missouri.
How the Company Makes MoneyH&R Block generates revenue primarily through its tax preparation services, which are offered via a network of company-owned and franchise retail locations, as well as its digital platforms. The company earns fees for preparing and filing tax returns for individuals and small businesses. Additionally, H&R Block offers complementary financial products and services, including refund transfer services, which allow clients to pay for their tax preparation fees out of their tax refund, and refund advance loans, which provide clients with early access to their anticipated tax refunds for a fee. Beyond these services, H&R Block generates income from its small business solutions, which include bookkeeping and payroll services. The company also benefits from strategic partnerships and collaborations with financial institutions to offer a broader range of financial products to its clients, enhancing its revenue streams.
H&R Block Financial Statement Overview
Summary
H&R Block demonstrates stable revenue and profit margins, but high leverage and negative equity position pose financial stability risks. Cash flow is stable, with room for growth in free cash flow.Income Statement
H&R Block shows a stable revenue growth, with a slight increase from the previous year. The company maintains a healthy gross profit margin and a consistent net profit margin. However, the EBIT margin has slightly decreased compared to the previous period, suggesting potential challenges in operational efficiency.70
Positive
Balance Sheet
The balance sheet reveals a high debt-to-equity ratio due to negative stockholders' equity in the latest TTM data, indicating a highly leveraged position. This could pose financial risks if not managed properly. The equity ratio is also negative, reflecting the company's reliance on debt financing.55
Neutral
Cash Flow
H&R Block's cash flow is stable, with a slight increase in free cash flow from the previous year. The operating cash flow to net income ratio is strong, indicating efficient cash generation relative to income. However, the free cash flow to net income ratio shows limited growth, suggesting potential constraints in cash flow expansion.65
Positive
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 3.62B | 3.61B | 3.47B | 3.46B | 3.41B | 2.64B | Gross Profit |
| 1.62B | 1.62B | 2.14B | 2.16B | 1.57B | 927.44M | EBIT |
| 783.27M | 805.28M | 784.19M | 747.35M | 775.61M | 198.72M | EBITDA |
| 929.95M | 963.19M | 914.69M | 889.53M | 932.46M | 368.26M | Net Income Common Stockholders |
| 586.22M | 595.32M | 553.70M | 553.67M | 583.79M | -7.53M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 203.23M | 1.05B | 986.98M | 885.01M | 934.25M | 2.66B | Total Assets |
| 2.57B | 3.22B | 3.07B | 3.27B | 3.65B | 5.11B | Total Debt |
| 1.88B | 1.49B | 1.93B | 1.92B | 1.94B | 4.00B | Net Debt |
| 1.67B | 437.77M | 947.93M | 1.04B | 1.00B | 1.34B | Total Liabilities |
| 2.78B | 3.13B | 3.04B | 3.06B | 3.30B | 5.04B | Stockholders Equity |
| -213.59M | 90.59M | 32.06M | 211.63M | 352.40M | 71.04M |
| Cash Flow | Free Cash Flow | ||||
| 657.77M | 657.18M | 752.14M | 746.58M | 573.14M | 27.28M | Operating Cash Flow |
| 727.27M | 720.86M | 821.84M | 808.54M | 625.93M | 108.96M | Investing Cash Flow |
| -96.36M | -93.86M | -101.39M | -76.54M | -45.52M | -470.23M | Financing Cash Flow |
| -653.56M | -564.31M | -750.99M | -1.26B | -2.41B | 1.53B |
H&R Block Technical Analysis
Positive
53.95
Price Trends
53.11
Positive
54.72
Negative
56.33
Negative
Market Momentum
0.06
Negative
55.24
Neutral
91.18
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HRB, the sentiment is Positive. The current price of 53.95 is above the 20-day moving average (MA) of 52.80, above the 50-day MA of 53.11, and below the 200-day MA of 56.33, indicating a neutral trend. The MACD of 0.06 indicates Negative momentum. The RSI at 55.24 is Neutral, neither overbought nor oversold. The STOCH value of 91.18 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HRB.
H&R Block Risk Analysis
H&R Block disclosed 23 risk factors in its most recent earnings report. H&R Block reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
H&R Block Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $172.01B | 57.46 | 17.43% | 0.63% | 13.73% | 9.93% | |
73 Outperform | $54.08B | 30.33 | 44.25% | 2.61% | 4.35% | 4.86% | |
61 Neutral | $7.24B | 14.47 | 657.13% | 2.57% | 3.77% | -2.16% | |
61 Neutral | $11.20B | 20.92 | 6.54% | 2.32% | 11.76% | 139.24% | |
59 Neutral | $12.60B | 11.17 | 0.97% | 3.72% | 1.34% | -21.34% | |
58 Neutral | ― | -1.71% | 14.19% | -22.07% | 75.49% | ||
51 Neutral | $846.96M | ― | -16.34% | ― | 6.78% | 33.06% |
* Consumer Cyclical Sector Average
Performance Comparison
HRB
H&R Block
53.95
6.08
12.70%
ECPG
Encore Capital
35.75
-9.86
-21.62%
HRZN
Horizon Technology
9.48
-0.54
-5.39%
INTU
Intuit
615.30
-30.74
-4.76%
JEF
Jefferies
54.35
11.25
26.10%
PAYX
Paychex
151.83
32.57
27.31%
H&R Block Earnings Call Summary
Earnings Call Date: Feb 4, 2025 | % Change Since: -0.19% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with several positive developments in small business growth, Wave revenue, and the Spruce platform balanced by challenges such as flat revenue growth, increased operating expenses, and a decline in Emerald Advance loan volume.Highlights
Small Business Growth
Assisted small business tax delivered strong revenue growth with double-digit revenue growth year-over-year in bookkeeping and payroll services.
Wave Revenue Increase
Wave achieved revenue growth of 15% in the quarter, driven by strong adoption of high-margin subscription products.
Spruce Platform Success
Spruce, the mobile banking platform, saw a 55% increase in sign-ups compared to the prior year, with customer deposits more than doubling.
AI Tax Assist Enhancement
The AI Tax Assist tool was significantly expanded, leading to greater conversion among new clients.
Strategic Capital Allocation
Share repurchase program was highlighted, buying back $190 million in the quarter, totaling 5% of the float for the year.
Lowlights
Flat Revenue Growth
Total revenue was flat year-over-year due to lower Emerald Advance volume.
Increase in Operating Expenses
Total operating expenses increased by 6% due to higher wages, increased healthcare costs, and occupancy costs.
Emerald Advance Loan Volume Decline
Lower interest and fee income on Emerald Advance due to a decrease in loan volume.
Second Quarter Loss
Pretax loss in the second quarter was $312 million, compared to $283 million in the prior year.
Company Guidance
During H&R Block's second quarter fiscal year 2025 earnings call, management provided several key metrics and guidance. Total revenue for the quarter was flat year-over-year at $179 million, impacted by lower Emerald Advance volume. However, the company saw strong performance in small business services with double-digit revenue growth. H&R Block repurchased $190 million in shares, bringing total repurchases to nearly 5% of the float. The company reaffirmed its fiscal 2025 outlook, expecting revenue between $3.69 billion and $3.75 billion, and EBITDA between $975 million and $1.02 billion. Additionally, H&R Block highlighted a lower effective tax rate of approximately 13% for the fiscal year. The company emphasized its strategic focus on small business services, financial products, and enhancing client experiences with digital tools, including the expansion of its AI Tax Assist tool.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.