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H&R Block (HRB)
NYSE:HRB
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H&R Block
(NYSE:HRB)
Rating:49Neutral
Price Target:
$56.00
▲(2.10%Upside)
Positive Factors
Financial Performance
H&R Block reported financial results for its fiscal third quarter that topped expectations.
Investment Rating
An aggressive share repurchase program and a secure dividend yielding 2.4% support the reiteration of the OUTPERFORM investment rating and the 12-month price target of $70.
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
Legal Expenses
Management expects EBITDA to be slightly below the midpoint of the guidance range for the full year due to higher-than-anticipated legal fees and settlements.
Profitability
The adjusted loss per share increased 36.2% from the previous year, indicating a decline in profitability.
H&R Block (HRB) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.47B
Dividend Yield2.69%
Average Volume (3M)1.33M
Price to Earnings (P/E)13.7
Beta (1Y)0.20
Revenue Growth3.71%
EPS Growth-8.07%
CountryUS
Employees4,200
SectorConsumer Cyclical
Sector Strength58
IndustryPersonal Products & Services
Share Statistics
EPS (TTM)5.38
Shares Outstanding133,880,420
10 Day Avg. Volume1,173,084
30 Day Avg. Volume1,325,404
Financial Highlights & Ratios
PEG Ratio0.80
Price to Book (P/B)152.58
Price to Sales (P/S)0.00
P/FCF Ratio6.50
Enterprise Value/Market Cap0.74
Enterprise Value/Revenue0.38
Enterprise Value/Gross Profit3.33
Enterprise Value/Ebitda1.46
Forecast
1Y Price Target
$70.00Price Target Upside27.62% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
H&R Block Business Overview & Revenue Model
Company DescriptionH&R Block, Inc. is a leading provider of tax preparation services, operating within the consumer services sector. The company offers a range of products and services designed to assist individuals and small businesses with their tax needs. Its core services include in-person tax preparation at retail locations, DIY online tax filing options, and tax software products. Additionally, H&R Block provides financial services such as refund transfers and peace of mind extended service plans.
How the Company Makes MoneyH&R Block generates revenue primarily through fees charged for its tax preparation services. These services are offered both in-person at retail locations and online through their digital platforms. The company earns money from the sale of DIY tax preparation software and online filing services. Additionally, H&R Block generates revenue through its financial services offerings, which include refund transfers and the sale of service plans that provide audit support and other benefits. Strategic partnerships with financial institutions and marketing collaborations also contribute to its earnings by enhancing the range of services and customer reach.
H&R Block Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q3-2025)
| % Change Since: -10.45%|
Next Earnings Date:Aug 13, 2025
Earnings Call Sentiment Positive
The earnings call presented a generally positive outlook with strong revenue and earnings growth, particularly in the Assisted and DIY segments. However, challenges such as the decline in franchise location volumes and higher legal expenses were noted. The positive highlights, including significant growth in various segments, suggest a strong performance overall.Q3-2025 Updates
Positive Updates
Revenue and Earnings Growth
H&R Block reported a 4% revenue growth, a 5% increase in EBITDA, and a 9% growth in EPS for the third quarter of fiscal year 2025.
Assisted Tax Segment Performance
The Assisted category delivered growth of 170 basis points, with improved volume and market share trends year-over-year. Client satisfaction scores increased, and there was a tenfold increase in new clients using the Second Look service.
DIY Segment Revenue Growth
DIY revenue grew by 8% year-over-year. The AI Tax Assist tool in DIY paid SKUs increased conversion by 13 points, and the DIY paid NAC was strong at $81.55, up 9% versus the prior year.
Small Business Revenue Growth
The small business segment delivered high single-digit revenue growth, and Wave, the subscription product, saw a 13% revenue increase.
Spruce Platform Growth
Spruce, H&R Block's mobile banking platform, saw over 700,000 sign-ups, nearly a 50% increase compared to the prior year.
Negative Updates
Franchise Location Declines
Franchise location volume was down 7.2%, primarily attributed to franchise buybacks.
Assisted Volume Decline
Total Assisted volumes were down 0.8%, compared to broader industry volume growth of around 1.7%.
Legal Expenses Impact
EBITDA is expected to be slightly below the midpoint of the range due to higher-than-anticipated legal fees and settlements.
Company Guidance
During H&R Block's third-quarter fiscal year 2025 earnings call, the company reported a 4% increase in revenue, a 5% growth in EBITDA, and a 9% rise in EPS. The company highlighted a shift in client preferences from DIY to Assisted tax preparation, with the Assisted category experiencing a growth of 170 basis points compared to 90 basis points in DIY. H&R Block's efforts to enhance client experience resulted in improved Assisted client conversion and retention, with a tenfold increase in new clients using the Second Look service, uncovering missed deductions in nearly 25% of cases. The company also reported an 8% increase in DIY revenue, with a strong DIY paid NAC of $81.55, up 9% from the previous year. H&R Block maintained discipline in a competitive promotional environment, focusing on paid DIY filers. The company's mobile banking platform, Spruce, saw a 50% increase in sign-ups year-over-year, with half of the deposits being nontax related. H&R Block reiterated its fiscal 2025 outlook, expecting revenue between $3.69 billion to $3.75 billion and EBITDA between $975 million to $1.02 billion, with a projected effective tax rate of approximately 13%.H&R Block Financial Statement Overview
Summary
The company's financial health has notably deteriorated recently, with negative profitability and cash flow, coupled with high leverage and negative equity. Despite historical revenue generation, current challenges could affect future stability.Income Statement
The income statement shows a concerning trajectory with a recent shift to negative profitability for TTM. Gross Profit Margin decreased significantly in the TTM period, and Net Profit Margin became negative, indicating financial strain. Historical revenue growth was positive but inconsistent, with a notable decline in the latest TTM data. EBIT and EBITDA margins have also deteriorated significantly, highlighting challenges in maintaining operational efficiency and profitability.45
Neutral
Balance Sheet
The balance sheet reflects financial stress, with negative Stockholders' Equity in the TTM period, indicating potential solvency issues. The Debt-to-Equity Ratio is not meaningful due to negative equity. Return on Equity is also not applicable for the TTM period. Historical data shows fluctuating equity levels, with recent years showing some stability before the TTM downturn. However, the high leverage poses a risk to financial stability.30
Negative
Cash Flow
Cash flow analysis indicates a recent deterioration in cash generation, with negative Free Cash Flow and Operating Cash Flow in the TTM period. The Operating Cash Flow to Net Income ratio highlights operational challenges, as both metrics turned negative. Historically, the company had positive cash flow generation, but the recent downturn indicates significant liquidity challenges that need to be addressed.40
Negative
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 3.71B | 3.61B | 3.47B | 3.46B | 3.41B | 2.64B | Gross Profit |
| 1.65B | 1.62B | 1.55B | 1.58B | 1.57B | 927.44M | EBIT |
| 807.52M | 805.28M | 748.70M | 744.90M | 769.63M | 183.08M | EBITDA |
| 959.91M | 963.19M | 914.69M | 889.53M | 932.46M | 262.26M | Net Income Common Stockholders |
| 564.15M | 595.32M | 553.70M | 553.67M | 583.79M | -7.53M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 772.95M | 1.05B | 986.98M | 885.01M | 934.25M | 2.66B | Total Assets |
| 3.25B | 3.22B | 3.07B | 3.27B | 3.65B | 5.11B | Total Debt |
| 1.92B | 1.49B | 1.93B | 1.92B | 1.94B | 4.00B | Net Debt |
| 1.15B | 437.77M | 947.93M | 1.04B | 1.00B | 1.34B | Total Liabilities |
| 3.44B | 3.13B | 3.04B | 3.06B | 3.30B | 5.04B | Stockholders Equity |
| -192.84M | 90.59M | 32.06M | 211.63M | 352.40M | 71.04M |
| Cash Flow | Free Cash Flow | ||||
| 648.29M | 657.18M | 752.14M | 746.58M | 573.14M | 27.28M | Operating Cash Flow |
| 729.92M | 720.86M | 821.84M | 808.54M | 625.93M | 108.96M | Investing Cash Flow |
| -105.11M | -93.86M | -101.39M | -76.54M | -45.52M | -470.23M | Financing Cash Flow |
| -639.31M | -564.31M | -750.99M | -1.26B | -2.41B | 1.53B |
H&R Block Technical Analysis
Negative
54.85
Price Trends
58.03
Negative
55.46
Negative
56.82
Negative
Market Momentum
-0.63
Positive
39.06
Neutral
21.69
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HRB, the sentiment is Negative. The current price of 54.85 is below the 20-day moving average (MA) of 56.86, below the 50-day MA of 58.03, and below the 200-day MA of 56.82, indicating a bearish trend. The MACD of -0.63 indicates Positive momentum. The RSI at 39.06 is Neutral, neither overbought nor oversold. The STOCH value of 21.69 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $4.22B | 18.64 | 132.22% | ― | 5.53% | 36.30% | |
75 Outperform | $691.27M | 14.73 | 22.96% | 1.02% | 5.02% | 45.34% | |
73 Outperform | $11.17B | 21.62 | 32.71% | 1.63% | 2.40% | 4.07% | |
73 Outperform | $7.05B | 44.53 | 12.63% | ― | 9.71% | 94.22% | |
66 Neutral | $2.00B | 25.26 | 8.21% | ― | 8.18% | 3.39% | |
62 Neutral | $6.88B | 11.07 | 2.77% | 4.28% | 2.67% | -24.94% | |
49 Neutral | $7.47B | 13.66 | 657.13% | 2.69% | 3.71% | -8.07% |
* Consumer Cyclical Sector Average
Performance Comparison
HRB
H&R Block
54.85
3.10
5.99%
CSV
Carriage Services
44.05
17.05
63.15%
SCI
Service International
78.31
7.69
10.89%
BFAM
Bright Horizons
123.46
21.24
20.78%
FTDR
frontdoor
57.40
22.09
62.56%
MCW
Mister Car Wash
6.17
-1.15
-15.71%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.