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H&R Block (HRB)
NYSE:HRB
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H&R Block
(NYSE:HRB)
54Neutral
Positive Factors
Financial Performance
H&R Block reported financial results for its fiscal third quarter that topped expectations, and full-year guidance was reaffirmed.
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. S&P 500 (SPY)
Market Cap
$7.70B
Dividend Yield2.51%
Average Volume (3M)1.80M
Price to Earnings (P/E)14.1
Beta (1Y)0.20
Revenue Growth3.71%
EPS Growth-8.07%
CountryUS
Employees4,200
SectorConsumer Cyclical
Sector Strength67
IndustryPersonal Products & Services
Share Statistics
EPS (TTM)5.38
Shares Outstanding133,880,420
10 Day Avg. Volume1,899,051
30 Day Avg. Volume1,800,886
Financial Highlights & Ratios
PEG Ratio-5.38
Price to Book (P/B)-21.92
Price to Sales (P/S)0.00
P/FCF Ratio11.74
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 Upside22.91% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
H&R Block Business Overview & Revenue Model
Company DescriptionH&R Block, Inc. (HRB) is a leading provider of tax preparation services headquartered in Kansas City, Missouri. Founded in 1955, the company operates primarily in the United States, Canada, and Australia. H&R Block offers a comprehensive range of products and services that assist individuals and small businesses with tax preparation and filing, either through in-person consultations at its retail tax offices or via its digital solutions, including online tax software and mobile applications. Beyond tax preparation, the company also provides financial services such as bookkeeping and payroll solutions, as well as access to refund advance loans and other financial products.
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 growth and profit margins, but high leverage and negative equity pose financial stability risks. Cash flow is strong, though there is room for improvement in free cash flow growth.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 | ||||
| 812.70M | 1.05B | 986.98M | 885.01M | 934.25M | 2.66B | Total Assets |
| 3.21B | 3.22B | 3.07B | 3.27B | 3.65B | 5.11B | Total Debt |
| 1.89B | 1.49B | 1.93B | 1.92B | 1.94B | 4.00B | Net Debt |
| 1.08B | 437.77M | 947.93M | 1.04B | 1.00B | 1.34B | Total Liabilities |
| 3.34B | 3.13B | 3.04B | 3.06B | 3.30B | 5.04B | Stockholders Equity |
| -129.81M | 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
Neutral
56.95
Price Trends
56.57
Positive
54.99
Positive
57.29
Positive
Market Momentum
0.62
Positive
43.85
Neutral
5.14
Positive
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 56.95 is below the 20-day moving average (MA) of 60.50, above the 50-day MA of 56.57, and below the 200-day MA of 57.29, indicating a neutral trend. The MACD of 0.62 indicates Positive momentum. The RSI at 43.85 is Neutral, neither overbought nor oversold. The STOCH value of 5.14 is Positive, 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
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $4.03B | 17.62 | 132.22% | ― | 5.53% | 36.30% | |
75 Outperform | $7.04B | 43.88 | 12.63% | ― | 9.71% | 94.22% | |
73 Outperform | $10.90B | 21.09 | 32.71% | 1.59% | 2.40% | 4.07% | |
69 Neutral | $652.51M | 13.91 | 22.96% | 1.08% | 5.02% | 45.34% | |
67 Neutral | $2.58B | 32.50 | 8.21% | ― | 8.18% | 3.39% | |
61 Neutral | $6.93B | 11.84 | 2.89% | 3.91% | 2.59% | -21.68% | |
54 Neutral | $7.70B | 14.08 | 657.13% | 2.51% | 3.71% | -8.07% |
* Consumer Cyclical Sector Average
Performance Comparison
HRB
H&R Block
56.95
5.25
10.15%
CSV
Carriage Services
42.33
16.11
61.44%
SCI
Service International
75.82
6.89
10.00%
BFAM
Bright Horizons
121.37
6.61
5.76%
FTDR
frontdoor
54.27
17.46
47.43%
MCW
Mister Car Wash
7.88
0.02
0.25%
H&R Block Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q3-2025)
| % Change Since: -7.61%|
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%.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.