H&R Block (HRB) AI Stock Analysis

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H&R Block

(NYSE:HRB)

Rating:57Neutral

Price Target:

$60.00

▲(3.00%Upside)

H&R Block's overall stock score of 56.6 reflects the significant financial challenges it faces, including negative profitability and cash flow. However, strong earnings growth and strategic initiatives, such as expansion in the Assisted and DIY segments, provide a positive outlook. The valuation remains moderate, offering some appeal to investors.

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

$7.80B

Dividend Yield2.48%

Average Volume (3M)1.43M

Price to Earnings (P/E)14.3

Beta (1Y)0.20

Revenue Growth3.71%

EPS Growth-8.07%

CountryUS

Employees4,200

SectorConsumer Cyclical

Sector Strength62

IndustryPersonal Products & Services

Share Statistics

EPS (TTM)5.38

Shares Outstanding133,880,420

10 Day Avg. Volume1,094,014

30 Day Avg. Volume1,426,055

Financial Highlights & Ratios

PEG Ratio1.16

Price to Book (P/B)-40.95

Price to Sales (P/S)0.00

P/FCF Ratio12.03

Enterprise Value/Market Cap1.15

Enterprise Value/Revenue0.61

Enterprise Value/Gross Profit5.41

Enterprise Value/Ebitda2.37

Forecast

1Y Price Target

$70.00

Price Target Upside20.17% 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: -4.90%|

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

H&R Block's financial health is strained, with negative profitability and cash flow in the latest TTM period. The balance sheet shows negative equity and high leverage, indicating potential solvency issues. Historical revenue growth was positive but inconsistent, and recent financials highlight significant challenges that could impact future stability.

Income Statement

Neutral

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.

Balance Sheet

Negative

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.

Cash Flow

Negative

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.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
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
245.31M	1.05B	986.98M	885.01M	934.25M	2.66B
	Total Assets
2.76B	3.22B	3.07B	3.27B	3.65B	5.11B
	Total Debt
2.12B	1.49B	1.93B	1.92B	1.94B	4.00B
	Net Debt
1.87B	437.77M	947.93M	1.04B	1.00B	1.34B
	Total Liabilities
2.83B	3.13B	3.04B	3.06B	3.30B	5.04B
	Stockholders Equity
-75.75M	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

Technical Analysis Sentiment

Positive

Last Price58.25

Price Trends

50DMA

57.98

Positive

100DMA

55.38

Positive

200DMA

57.04

Positive

Market Momentum

MACD

-0.04

Negative

RSI

53.18

Neutral

STOCH

70.72

Neutral

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 58.25 is above the 20-day moving average (MA) of 57.25, above the 50-day MA of 57.98, and above the 200-day MA of 57.04, indicating a bullish trend. The MACD of -0.04 indicates Negative momentum. The RSI at 53.18 is Neutral, neither overbought nor oversold. The STOCH value of 70.72 is Neutral, 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 (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FTDR	78 Outperform	$4.26B	18.82	132.22%	―	5.53%	36.30%
BFAM	77 Outperform	$7.27B	45.90	12.63%	―	9.71%	94.22%
CSV	75 Outperform	$706.65M	15.06	22.96%	1.00%	5.02%	45.34%
SCI	73 Outperform	$11.28B	21.83	32.71%	1.54%	2.40%	4.07%
MCW	64 Neutral	$2.13B	26.89	8.21%	―	8.18%	3.39%
Sector *	62 Neutral	$6.88B	11.32	2.90%	3.87%	2.70%	-24.57%
HRB	57 Neutral	$7.80B	14.26	657.13%	2.48%	3.71%	-8.07%

* Consumer Cyclical Sector Average

Performance Comparison

HRB

H&R Block

58.25

9.40

19.24%

CSV

Carriage Services

45.03

16.97

60.48%

SCI

Service International

79.24

9.02

12.85%

BFAM

Bright Horizons

126.95

20.03

18.73%

FTDR

frontdoor

57.94

22.97

65.68%

MCW

Mister Car Wash

6.57

-0.14

-2.09%

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.