H&R Block, Inc. (HRB): Earnings Analysis

H&R Block, Inc. (NYSE:HRBdiscussed wider losses in its Q1 2014 earnings call yesterday; the company’s plan to shed H&R Block, Inc. (NYSE:HRB) Bank is still awaiting regulatory approval. The company has joined up with GoHealth to help provide online health insurance and remain a trusted brand in the “newly created intersection of taxes and health care,” in the words of William Cobb, CEO. Is H&R Block, Inc. (NYSE:HRB) investing enough in its future growth? We analyze the company’s preliminary financial results for the quarter ended 2013-07-31 relative to its peers (scroll to the end of this post for the peer list).

H&R Block, Inc. (NYSE:HRB)

Does H&R Block have any new operational advantages? Find out with this Free report!

Download Now!

Our analysis is based on the company’s performance over the last twelve months (unless stated otherwise). The table below shows the preliminary results along with the recent trend for revenues, net income and returns.

Quarterly (USD million) 2013-07-31 2013-04-30 2013-01-31 2012-10-31 2012-07-31
Revenues 127.2 2,200.2 472.0 137.3 96.5
Revenue Growth % (94.2) 366.2 243.9 42.3 (95.2)
Net Income (113.3) 688.6 (17.0) (101.2) (105.7)
Net Income Growth % (116.4) N/A N/A N/A (117.9)
Net Margin % (89.1) 31.3 (3.6) (73.7) (109.5)
ROE % (Annualized) (38.3) 290.2 (10.2) (52.6) (38.9)
ROA % (Annualized) (10.9) 65.0 (1.7) (10.8) (10.3)

Valuation Drivers

H&R Block, Inc. (NYSE:HRB)’s current Price/Book of 6.9 is about median in its peer group. HRB’s operating performance is higher than the median of its chosen peers (ROE of 46.9% compared to the peer median ROE of 17.4%) but the market does not seem to expect higher growth relative to peers (PE of 18.1 compared to peer median of 20.8) but simply to maintain its relatively high rates of return.

The company attempts to achieve high profit margins (currently 15.6% vs. peer median of 11.6%) through differentiated products. It currently operates with peer median asset turns of 0.8x. HRB.’s net margin is similar to last year’s high of 16.0%, which compares to a low of 11.1% in 2011.

Growth & Investment Strategy

While the company’s revenues growth has been below the peer median in the last few years (-9.1% vs. 3.1% respectively for the past three years), the market still gives the stock an about peer median PE ratio of 18.1. The market seems to see H&R Block, Inc. (NYSE:HRB) as a long-term strategic bet.

HRB’s annualized rate of change in capital of -5.2% over the past three years is less than its peer median of 9.0%. This investment has generated a peer median return on capital of 15.7% averaged over the same three years. The median return on capital investment on a relatively lower investment suggests that the company is under investing.

Trend Charts

H&R Block (HRB) Peers List

Intuit Inc. (NASDAQ:INTU), CBIZ, Inc. (NYSE:CBZ), Euro-Tax.pl S.A. (ETX-PL), JTH Holding Inc (NASDAQ:TAX) and PRGX Global Inc (NASDAQ:PRGX).

Does H&R Block have any new operational advantages? Find out with this Free report!

Download Now!

Disclaimer

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!