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H&R Block (HRB-N) has recently reported impressive earnings, causing its stock to surge by 14% in a single day. In the past year, the stock has increased by an outstanding 80%, notably outperforming six of the seven 'Magnificent' tech stocks. The company has not only raised its dividend but also announced stock buybacks, signifying its strong financial health and commitment to returning value to shareholders. With a current trading multiple of 14x earnings, the stock appears to be significantly undervalued at a 40% discount compared to its discretionary peers. Additionally, H&R Block enjoys an operating margin that is double that of its competitors in a relatively capital-light business model, reinforcing its position as a solid compounder in the market.
HRB provides assisted income tax return preparation service and is now trading at 10.2x times' Forward P/E. HRB operates in a mature industry. In the last few years, revenue has been stable (except for the drop in COVID years), but growth is very limited. Based on consensus estimates, sales are expected to grow by 2% going forward. As the industry faces a secular headwind by losing shares to Do-It-Yourself (DIY) tax software.
The balance sheet is strong, with net debt of $951M and net debt/EBITDA of 0.8x. The company generated healthy cash flow which was used to repurchase shares aggressively in the last few years. Overall, a 'value' type of name with lots of cash flow, a strong balance sheet but limited growth. Investors can do okay from here given the company continues buying back 5%-8% of its shares annually. We would not say it is recession 'proof' but certainly its business is largely stable, except for the threat of competition as noted above.
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HRB recently reported results with revenue essentially meeting estimates but EPS of $4.2 missed estimates of $4.46. Tax season came in weaker than HRB was expecting and guidance also came down because of this. They have a $900 mln buyback program available and the shares are cheap. We don't like to call dividends 'safe' but cash flows cover the dividend so we would not be too concerned on this front. We think a case can be made for HRB but with the flat growth, it is not a name that would really interest us.
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H&R Block is a American stock, trading under the symbol HRB-N on the New York Stock Exchange (HRB). It is usually referred to as NYSE:HRB or HRB-N
In the last year, 1 stock analyst published opinions about HRB-N. 1 analyst recommended to BUY the stock. 0 analysts recommended to SELL the stock. The latest stock analyst recommendation is . Read the latest stock experts' ratings for H&R Block.
H&R Block was recommended as a Top Pick by on . Read the latest stock experts ratings for H&R Block.
Earnings reports or recent company news can cause the stock price to drop. Read stock experts’ recommendations for help on deciding if you should buy, sell or hold the stock.
1 stock analyst on Stockchase covered H&R Block In the last year. It is a trending stock that is worth watching.
On 2025-05-07, H&R Block (HRB-N) stock closed at a price of $62.3.
Just announced blow-out earnings and shares are jumping 14% today. Is up 80% in the past year, outperforming 6 of the Mag 7 names. They raised their dividend and buybacks. A good compounder. Trades at 14x today, and a 40% discount to discretionary peers. Operating margin is double their peers in a capital-lite business.