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H&R Block (HRB)
:HRB

H&R Block (HRB) AI Stock Analysis

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H&R Block

(NYSE:HRB)

61Neutral
H&R Block's stable financial performance is overshadowed by high leverage and flat revenue growth. Technical indicators show limited momentum. Valuation appears reasonable, and strategic focus on digital tools is promising, but challenges in operating expenses and loan volume persist.
Positive Factors
Financial Performance
Full-year guidance was reaffirmed, indicating confidence in the company's future performance.
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.

H&R Block (HRB) vs. S&P 500 (SPY)

H&R Block Business Overview & Revenue Model

Company DescriptionH&R Block, Inc. engages in the provision of tax preparation and other services. It offers assisted and do-it-yourself tax return preparation solutions through multiple channels and distribute the H&R block-branded financial products and services, including those of its financial partners, to the general public primarily in the United States, Canada, and Australia. The company was founded by Henry W. Bloch and Richard A. Bloch on January 25, 1955 and is headquartered in Kansas City, MO.
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
70
Positive
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.
Balance Sheet
55
Neutral
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.
Cash Flow
65
Positive
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.
Breakdown
TTMJun 2024Jun 2023Jun 2022Jun 2021Jun 2020
Income StatementTotal Revenue
3.62B3.61B3.47B3.46B3.41B2.64B
Gross Profit
1.62B1.62B2.14B2.16B1.57B927.44M
EBIT
783.27M805.28M784.19M747.35M775.61M198.72M
EBITDA
929.95M963.19M914.69M889.53M932.46M368.26M
Net Income Common Stockholders
586.22M595.32M553.70M553.67M583.79M-7.53M
Balance SheetCash, Cash Equivalents and Short-Term Investments
203.23M1.05B986.98M885.01M934.25M2.66B
Total Assets
2.57B3.22B3.07B3.27B3.65B5.11B
Total Debt
1.88B1.49B1.93B1.92B1.94B4.00B
Net Debt
1.67B437.77M947.93M1.04B1.00B1.34B
Total Liabilities
2.78B3.13B3.04B3.06B3.30B5.04B
Stockholders Equity
-213.59M90.59M32.06M211.63M352.40M71.04M
Cash FlowFree Cash Flow
657.77M657.18M752.14M746.58M573.14M27.28M
Operating Cash Flow
727.27M720.86M821.84M808.54M625.93M108.96M
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-2.41B1.53B

H&R Block Technical Analysis

Technical Analysis Sentiment
Negative
Last Price50.23
Price Trends
50DMA
53.30
Negative
100DMA
55.54
Negative
200DMA
56.16
Negative
Market Momentum
MACD
-0.08
Positive
RSI
38.85
Neutral
STOCH
37.24
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 50.23 is below the 20-day moving average (MA) of 52.81, below the 50-day MA of 53.30, and below the 200-day MA of 56.16, indicating a bearish trend. The MACD of -0.08 indicates Positive momentum. The RSI at 38.85 is Neutral, neither overbought nor oversold. The STOCH value of 37.24 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 (59)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
80
Outperform
$52.75B30.8346.16%2.67%4.18%5.67%
79
Outperform
$164.02B54.1817.43%0.66%13.73%9.93%
JEJEF
70
Outperform
$11.22B18.286.86%2.57%45.39%172.96%
HRHRB
61
Neutral
$7.14B14.69657.13%2.60%3.77%-2.16%
59
Neutral
$12.41B10.341.32%3.61%1.65%-18.04%
51
Neutral
$794.84M-16.34%6.78%33.06%
46
Neutral
-1.71%14.22%-22.07%75.49%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
HRB
H&R Block
50.23
4.77
10.49%
ECPG
Encore Capital
32.68
-13.97
-29.95%
HRZN
Horizon Technology
9.18
-0.96
-9.47%
INTU
Intuit
591.14
-54.94
-8.50%
JEF
Jefferies
54.92
12.19
28.53%
PAYX
Paychex
145.01
26.95
22.83%

H&R Block Earnings Call Summary

Earnings Call Date: Feb 4, 2025 | % Change Since: -7.07% | 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.