H&R Block (HRB)
NYSE:HRB
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H&R Block
(NYSE:HRB)
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Rating:72Outperform
Price Target:
$41.00
▲(27.49% Upside)
Action:Reiterated
Date:05/09/26
The score is driven primarily by strong valuation (very low P/E and ~4.4% yield) and a positive earnings update with raised guidance and solid operating momentum. These are tempered by elevated financial risk from extremely high leverage/negative equity and mixed near-term fundamentals in the TTM snapshot (sharp revenue decline and negative EBIT), while technicals remain supportive with strong momentum.
Positive Factors
Free Cash Flow Strength
TTM free cash flow growth (~45%) provides a durable financing source for dividends, buybacks, debt service and reinvestment. Reliable cash conversion supports multi-year capital allocation, cushions seasonal swings in tax revenue, and funds digital and AI investments without immediate reliance on external financing.
Negative Factors
High Leverage / Negative Equity
Extremely high leverage and negative TTM equity materially constrain balance sheet flexibility. Heavy debt raises refinancing and interest risks, restricts M&A and investment capacity, limits ability to smooth seasonal cash shortfalls, and makes the company more vulnerable to adverse operating shocks over the medium term.
Read all positive and negative factors
Positive Factors
Negative Factors
Free Cash Flow Strength
TTM free cash flow growth (~45%) provides a durable financing source for dividends, buybacks, debt service and reinvestment. Reliable cash conversion supports multi-year capital allocation, cushions seasonal swings in tax revenue, and funds digital and AI investments without immediate reliance on external financing.
Read all positive factors
H&R Block (HRB) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.81B
Dividend Yield3.67%
Average Volume (3M)2.73M
Price to Earnings (P/E)6.6
Beta (1Y)0.28
Revenue Growth5.36%
EPS Growth36.69%
CountryUS
Employees4,200
SectorConsumer Cyclical
Sector Strength84
IndustryPersonal Products & Services
Share Statistics
EPS (TTM)5.63
Shares Outstanding126,760,210
10 Day Avg. Volume2,120,496
30 Day Avg. Volume2,733,939
Financial Highlights & Ratios
PEG Ratio1.49
Price to Book (P/B)82.71
Price to Sales (P/S)1.95
P/FCF Ratio12.28
Enterprise Value/Market Cap1.25
Enterprise Value/Revenue1.54
Enterprise Value/Gross Profit2.82
Enterprise Value/Ebitda5.70
Forecast
1Y Price Target
$39.50Price Target Upside22.82% Upside
Rating ConsensusHold
Number of Analyst Covering2
EPS Forecast (FY)5
Revenue Forecast (FY)$3.89B
H&R Block Business Overview & Revenue Model
Company Description
H&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 compa...
How the Company Makes Money
H&R Block primarily makes money by charging fees for tax preparation and related services, generated through multiple channels. (1) Assisted tax preparation (retail and virtual): The company earns revenue from preparing and filing tax returns for ...
H&R Block Earnings Call Summary
Earnings Call Date:May 06, 2026
(Q3-2026)
| % Change Since: |
Next Earnings Date:Aug 18, 2026
Earnings Call Sentiment Positive
The call emphasized strong operational and financial results (revenue, EBITDA, EPS growth), a raised full-year outlook, stabilization of assisted market share, meaningful AI adoption and customer experience improvements, and disciplined capital returns. Challenges were acknowledged but limited: higher peak labor costs, franchise volume weakness (partially offset by buybacks), declines in paid DIY volumes tied to strategic choices, and a non-recurring tax benefit that improves comparability. Management also highlighted a potential normalization risk next year if withholding tables are updated. Overall, positive momentum and strategic positioning outweigh the contained near-term challenges.Positive Updates
Revenue and Profit Growth
Q3 revenue of $2.4B, up 5.3% year-over-year; Q3 EBITDA of $1.1B, up 5.9% YoY; adjusted EPS up 12% (adjusted EPS $6.02, +11.9% YoY) and EPS from continuing operations $6.61, +24.2% YoY.
Negative Updates
Rising Operating and Labor Costs
Total operating expenses were $1.4B, up 4.8% YoY, driven primarily by higher field wages and overtime as a result of peak-season processing concentrated late in the season.
Read all updates
Q3-2026 Updates
Positive
Negative
Revenue and Profit Growth
Q3 revenue of $2.4B, up 5.3% year-over-year; Q3 EBITDA of $1.1B, up 5.9% YoY; adjusted EPS up 12% (adjusted EPS $6.02, +11.9% YoY) and EPS from continuing operations $6.61, +24.2% YoY.
Read all positive updates
Company Guidance
Management raised fiscal 2026 guidance to revenue of $3.91–$3.92 billion, EBITDA of $1.025–$1.035 billion, an effective tax rate of ≈14%, and adjusted diluted EPS of $5.10–$5.20, driven by strong Q3 results (Q3 revenue $2.4B, +5.3% YoY; Q3 EBITDA $1.1B, +5.9% YoY; total operating expenses $1.4B, +4.8%), a Q3 effective tax rate of 16.5% (vs. 24.6% prior year) that included an $84.1M one‑time benefit ($0.65 EPS), net income from continuing ops $848.8M (+17.4%) and EPS $6.61 (+24.2%), adjusted net income $773.7M (+5.8%) and adjusted EPS $6.02 (+11.9%); year‑to‑date operating cash flow was $586.7M, the company returned $560.9M to shareholders and the Board approved an incremental $100M repurchase (bringing potential FY repurchases to ~$500M with ~ $700M remaining under the $1.5B program), and the outlook incorporates full‑season results, peak period labor costs and a planned marketing timing shift—backed by operational metrics such as assisted volume +2.1% with NAC +3.9%, DIY mix improvement of 140 bps, product attach +550 bps, Second Look new‑client retention lift of 600+ bps, AI Tax Assist handling 4.1M messages (up 88%), average refunds +11%, ~7% more clients receiving refunds and >25% fewer clients owing the IRS.H&R Block Financial Statement Overview
Summary
Income Statement
56
Neutral
Balance Sheet
28
Negative
Cash Flow
72
Positive
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Apr 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.91B | 3.76B | 3.61B | 3.47B | 3.46B | 3.46B |
| Gross Profit | 2.13B | 1.67B | 1.62B | 1.55B | 1.58B | 1.58B |
| EBITDA | 1.06B | 976.34M | 963.19M | 914.69M | 889.53M | 889.53M |
| Net Income | 739.36M | 605.77M | 595.32M | 553.70M | 553.67M | 553.67M |
Balance Sheet | ||||||
| Total Assets | 3.39B | 3.26B | 3.22B | 3.07B | 3.27B | 3.65B |
| Cash, Cash Equivalents and Short-Term Investments | 886.75M | 1.00B | 1.08B | 1.02B | 1.05B | 1.06B |
| Total Debt | 2.03B | 2.35B | 2.23B | 2.18B | 2.15B | 2.18B |
| Total Liabilities | 3.42B | 3.18B | 3.13B | 3.04B | 3.06B | 3.30B |
| Stockholders Equity | -24.37M | 88.90M | 90.59M | 32.06M | 211.63M | 352.40M |
Cash Flow | ||||||
| Free Cash Flow | 760.88M | 598.85M | 657.18M | 752.14M | 746.58M | 573.14M |
| Operating Cash Flow | 838.28M | 680.88M | 720.86M | 821.84M | 808.54M | 625.93M |
| Investing Cash Flow | -117.04M | -105.37M | -93.86M | -101.39M | -76.54M | -45.52M |
| Financing Cash Flow | -631.42M | -647.44M | -564.31M | -750.99M | -1.26B | -2.41B |
H&R Block Technical Analysis
Neutral
32.16
Price Trends
33.56
Positive
33.49
Positive
39.86
Negative
Market Momentum
1.42
Positive
56.54
Neutral
22.94
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HRB, the sentiment is Neutral. The current price of 32.16 is below the 20-day moving average (MA) of 37.48, below the 50-day MA of 33.56, and below the 200-day MA of 39.86, indicating a neutral trend. The MACD of 1.42 indicates Positive momentum. The RSI at 56.54 is Neutral, neither overbought nor oversold. The STOCH value of 22.94 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $4.81B | 6.56 | -225.85% | 3.67% | 5.36% | 36.69% | |
69 Neutral | $4.36B | 17.16 | 99.90% | ― | 12.12% | 14.91% | |
68 Neutral | $3.14B | 17.68 | 14.25% | ― | 9.22% | 20.19% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
61 Neutral | $9.50B | 15.50 | 39.46% | 1.66% | 2.76% | 4.18% | |
57 Neutral | $592.36M | 13.29 | 17.60% | 1.06% | 1.16% | -8.25% |
* Consumer Cyclical Sector Average
HRB
H&R Block
37.47
-17.88
-32.30%
CSV
Carriage Services
37.55
-6.58
-14.91%
SCI
Service International
69.81
-7.13
-9.26%
BFAM
Bright Horizons
61.54
-64.40
-51.14%
FTDR
frontdoor
63.21
6.25
10.98%
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.