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

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

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 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!