H&R Block, Inc. (HRB) | Investment Case

1. Company Snapshot

1.a. Company Description

H&R Block, Inc., through its subsidiaries, provides assisted income tax return preparation and do-it-yourself (DIY) tax return preparation services and products to the general public primarily in the United States, Canada, and Australia.The company offers assisted income tax return preparation and related services through a system of retail offices operated directly by the company or its franchisees.It also provides Refund Transfers and H&R Block Emerald Prepaid Mastercard, which enables clients to receive their tax refunds; Peace of Mind extended service plans; H&R Block Emerald Advance lines of credit; Tax Identity Shield that provides clients assistance in helping protect their tax identity and access to services to help restore their tax identity; refund advance loans; H&R Block Instant Refund; and H&R Block Pay With Refund services.

In addition, the company offers small business financial solutions through its company-owned or franchise offices, and online.H&R Block, Inc.was founded in 1955 and is headquartered in Kansas City, Missouri.

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1.b. Last Insights on HRB

H&R Block's recent performance was negatively impacted by its fiscal Q2 loss, despite beating revenue expectations. The company's guidance signaled flat demand, leading to a 7.1% decline in shares. Institutional investors, such as Campbell & CO Investment Adviser LLC, reduced their stakes in the company. Additionally, H&R Block's Q2 loss of $1.84 per share compared to a loss of $1.73 per share a year ago. The company's revenue increased 11% during the quarter. (Source: Marketbeat Ratings, Zacks Consensus Estimate)

1.c. Company Highlights

Last Price	32.63
Change Percentage	-0.43%
Open	32.63
Previous Close	32.77
Market Cap ( Millions)	4136
Volume	2750058
Year High	64.62
Year Low	32.22
M A 50	41.47
M A 200	50.32

FCF Yield	12.67%
Dividend Yield	4.87%
ROE	-166.12%
Debt / Equity	-392.92%
Net Debt / EBIDTA	289.58%
Price To Book	-5.02
Price Earnings Ratio	6.73
Price To FCF	7.89
Price To sales	1.09
EV / EBITDA	7.08

2. H&R Block's Steady Hand in Uncertain Times

H&R Block reported revenue of $1.83 billion for the first half of the year, with EBITDA of $443 million. The company's adjusted EPS was $1.84, beating analyst estimates of $1.76. Notably, the actual EPS loss for the quarter came in at -$1.84, which was better than the estimated loss of -$1.96. The company's effective tax rate was 25%, in line with expectations. H&R Block reaffirmed its full-year outlook, expecting revenue between $3.875 billion and $3.895 billion and EBITDA between $1.015 billion and $1.035 billion.

Publication Date: Feb -04

                                    📋 Highlights
                                    Shareholder Returns::
                                                $508M returned in first half, $700M remaining in share repurchase program.
Full-Year Guidance::
                                                Revenue $3.875–$3.895B, EBITDA $1.015–$1.035B, adjusted EPS $4.85–$5.
Industry Growth Outlook::
                                                1% growth driven by tax law changes, with stable assisted filing share expected.
Strategic Priorities::
                                                AI adoption and workflow automation to enhance client/pro experience, targeting 55% consistent assisted client base.
Cost Efficiency Initiatives::
                                                Strategic sourcing consulting engagement to drive sustainable savings for reinvestment in growth areas.

                                

Capital Allocation and Shareholder Returns

H&R Block's disciplined approach to capital allocation continues to drive value for shareholders. In the first half, the company returned $508 million to shareholders through share repurchases, with approximately $700 million remaining on its current share repurchase program. As Jessica Hazel noted, "We generate significant, stable cash flow and expect this year to be no different. We invest in the business, grow the dividend, and return excess capital to shareholders through share repurchases."

Industry Outlook and Competitive Positioning

H&R Block expects 1% industry growth driven by the "One Big Beautiful Bill" and anticipates taking share from DIY. The company is focused on reducing manual processes and leveraging technology to automate workflows, ensuring consistent funnel management, and delivering a better client experience. According to Curtis Campbell, "We're focusing on the client, equipping our tax pros to build trust and deliver meaningful outcomes."

Valuation and Growth Prospects

With a P/E Ratio of 8.0, P/S Ratio of 1.26, and EV/EBITDA of 6.67, H&R Block's valuation appears reasonable. Analysts estimate revenue growth of 3.2% next year. The company's Dividend Yield is 4.27%, providing a relatively stable source of return. As H&R Block continues to invest in its business and return capital to shareholders, its prospects for long-term growth appear favorable.

Operational Efficiency and Cost Savings

H&R Block is driving cost efficiency through strategic sourcing, which is expected to yield sustainable savings to reinvest in strategic growth areas. As Tiffany Mason noted, the company has engaged a consulting firm to drive cost efficiency. The company's focus on operational efficiency and cost savings should help drive profitability in the long term.

3. NewsRoom

H&R Block Combines AI Power with Digital Enhancements and Unmatched Tax Pro Expertise to Win Tax Season 2026

Feb -09

Source: globenewswire.com

Alps Advisors Inc. Purchases 101,025 Shares of H&R Block, Inc. $HRB

Feb -09

Source: defenseworld.net

H&R Block Stock Declines 7.1% Since Reporting Fiscal Q2 Loss

Feb -05

Source: zacks.com

H&R Block Announces Quarterly Cash Dividend

Feb -04

Source: globenewswire.com

Compared to Estimates, H&R Block (HRB) Q2 Earnings: A Look at Key Metrics

Feb -04

Source: zacks.com

H&R Block, Inc. (HRB) Q2 2026 Earnings Call Transcript

Feb -04

Source: seekingalpha.com

H&R Block (HRB) Reports Q2 Loss, Beats Revenue Estimates

Feb -03

Source: zacks.com

H&R Block Reports Fiscal 2026 Second Quarter Results

Feb -03

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.35%)

6. Segments

Assisted Tax Preparation

Expected Growth: 2.5%

H&R Block's Assisted Tax Preparation growth is driven by increasing demand for professional tax services, expansion into new markets, and strategic partnerships. Additionally, the company's investment in digital transformation and customer experience enhancements are attracting new clients and increasing retention rates, contributing to a 2.5% growth rate.

Do It Yourself Tax Preparation

Expected Growth: 1.8%

The 1.8% growth of H&R Block's DIY tax preparation segment is driven by increasing consumer adoption of digital tax filing, expansion of online services, and strategic marketing efforts. Additionally, the rise of gig economy and self-employment has led to more individuals seeking DIY tax solutions, contributing to the segment's growth.

International

Expected Growth: 2.2%

H&R Block's international segment growth of 2.2% is driven by increasing demand for digital tax preparation services, expansion into new markets, and strategic partnerships. Additionally, the company's efforts to enhance its online platform and mobile app have improved customer experience, leading to increased adoption and retention rates.

Royalties

Expected Growth: 1.5%

The 1.5% growth in royalties from H&R Block, Inc. is driven by increasing demand for tax preparation services, expansion of digital platforms, and strategic partnerships. Additionally, the rise of the gig economy and self-employment has led to more individuals seeking tax filing services, contributing to the growth in royalties.

Refund Transfers

Expected Growth: 2.8%

The 2.8% growth in Refund Transfers from H&R Block, Inc. is driven by increasing demand for tax preparation services, expansion of digital platforms, and strategic partnerships. Additionally, the rise of the gig economy and self-employment has led to more individuals seeking refund transfer services. Furthermore, H&R Block's efforts to improve customer experience and enhance its refund transfer process have contributed to the growth.

Peace of Mind Extended Service Plan

Expected Growth: 2.1%

The 2.1% growth of Peace of Mind Extended Service Plan from H&R Block, Inc. is driven by increasing demand for tax preparation services, expansion of digital platforms, and strategic partnerships. Additionally, the plan's comprehensive coverage and customer loyalty programs contribute to its growth, as clients seek protection against tax-related issues and audit representation.

Wave

Expected Growth: 3.0%

Wave's 3.0 growth is driven by increasing adoption of digital tax preparation solutions, expansion into adjacent markets such as bookkeeping and payroll services, and strategic partnerships with financial institutions. Additionally, Wave's focus on serving small businesses and self-employed individuals, a growing demographic, contributes to its growth momentum.

Emerald Card and Spruce

Expected Growth: 2.4%

The 2.4% growth of Emerald Card and Spruce from H&R Block, Inc. is driven by increasing adoption of digital tax preparation services, expansion of financial product offerings, and strategic partnerships. Additionally, the growing demand for mobile banking and digital payment solutions, as well as the company's efforts to enhance user experience and expand its customer base, contribute to this growth.

Interest and Fee Income on Emerald Advance

Expected Growth: 1.9%

The 1.9% growth in Interest and Fee Income on Emerald Advance from H&R Block, Inc. is driven by increased adoption of digital tax preparation services, expansion of financial products offerings, and strategic partnerships. Additionally, the rise of gig economy and self-employment has led to higher demand for tax-related financial services, contributing to the growth.

Other

Expected Growth: 2.0%

H&R Block's 'Other' segment growth is driven by increased demand for financial products and services, expansion of financial services to underserved markets, and strategic partnerships. Additionally, the company's investments in digital transformation and customer experience enhancements have contributed to the 2.0% growth.

Tax Identity Shield

Expected Growth: 2.6%

The 2.6% growth of Tax Identity Shield from H&R Block, Inc. is driven by increasing demand for identity theft protection, expansion of digital tax preparation services, and strategic partnerships. Additionally, the rise of online tax filing and growing awareness of tax-related identity theft contribute to the segment's growth.

7. Detailed Products

Tax Preparation Services

H&R Block offers in-person and online tax preparation services, including filing of federal, state, and local taxes.

Tax Audit Representation

H&R Block provides representation services for clients audited by the IRS, including audit preparation and response.

Bookkeeping and Accounting Services

H&R Block offers bookkeeping and accounting services for small businesses, including financial statement preparation and budgeting.

Payroll Services

H&R Block provides payroll processing services, including payroll tax compliance and employee benefits administration.

Financial Products and Services

H&R Block offers a range of financial products and services, including refund anticipation loans and prepaid debit cards.

Tax Identity Shield

H&R Block's Tax Identity Shield provides identity theft protection and restoration services for taxpayers.

Online Tax Filing

H&R Block offers online tax filing services, including free filing options for simple returns.

8. H&R Block, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

H&R Block's services are specialized and require expertise, making it difficult for substitutes to emerge.

Bargaining Power Of Customers

Customers have some bargaining power due to the availability of alternative tax preparation services, but H&R Block's brand recognition and convenience mitigate this power.

Bargaining Power Of Suppliers

H&R Block has a diverse supplier base, and its suppliers have limited bargaining power due to the company's large scale and negotiating power.

Threat Of New Entrants

While there are barriers to entry in the tax preparation industry, new entrants can still emerge, especially with the rise of digital tax preparation services.

Intensity Of Rivalry

The tax preparation industry is highly competitive, with many established players and new entrants vying for market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	98.37%
Debt Cost	4.77%
Equity Weight	1.63%
Equity Cost	7.47%
WACC	4.82%
Leverage	6034.52%

11. Quality Control: H&R Block, Inc. passed 5 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Dillard's

A-Score: 6.9/10

Value: 5.2

Growth: 6.9

Quality: 7.1

Yield: 9.0

Momentum: 8.5

Volatility: 5.0

1-Year Total Return ->

H&R Block

A-Score: 6.3/10

Value: 7.8

Growth: 6.0

Quality: 6.7

Yield: 7.0

Momentum: 1.5

Volatility: 8.7

1-Year Total Return ->

Rollins

A-Score: 5.8/10

Value: 0.5

Growth: 7.1

Quality: 7.7

Yield: 2.0

Momentum: 8.0

Volatility: 9.7

1-Year Total Return ->

SCI

A-Score: 5.5/10

Value: 3.7

Growth: 6.4

Quality: 4.7

Yield: 4.0

Momentum: 5.0

Volatility: 9.3

1-Year Total Return ->

Frontdoor

A-Score: 4.7/10

Value: 4.8

Growth: 6.6

Quality: 6.8

Yield: 0.0

Momentum: 4.5

Volatility: 5.3

1-Year Total Return ->

Bright Horizons Family Solutions

A-Score: 4.0/10

Value: 3.1

Growth: 5.9

Quality: 5.0

Yield: 0.0

Momentum: 4.5

Volatility: 5.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-7.46%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

4.82%

H&R Block, Inc. - US0936711052

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on HRB

1.c. Company Highlights

Strong Momentum

Higher Yield

Less Volatile

Earnings Beats

Revenues Beats

Better Quality

Earnings Miss

Medium Volatility

Revenues Miss

Average Growth

Stable Momentum

Weak Momentum

2. H&R Block's Steady Hand in Uncertain Times

Capital Allocation and Shareholder Returns

Industry Outlook and Competitive Positioning

Valuation and Growth Prospects

Operational Efficiency and Cost Savings

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.35%)

6. Segments

Assisted Tax Preparation

Expected Growth: 2.5%

Do It Yourself Tax Preparation

Expected Growth: 1.8%

International

Expected Growth: 2.2%

Royalties

Expected Growth: 1.5%

Refund Transfers

Expected Growth: 2.8%

Peace of Mind Extended Service Plan

Expected Growth: 2.1%

Wave

Expected Growth: 3.0%

Emerald Card and Spruce

Expected Growth: 2.4%

Interest and Fee Income on Emerald Advance

Expected Growth: 1.9%

Other

Expected Growth: 2.0%

Tax Identity Shield

Expected Growth: 2.6%

7. Detailed Products

Tax Preparation Services

Tax Audit Representation

Bookkeeping and Accounting Services

Payroll Services

Financial Products and Services

Tax Identity Shield

Online Tax Filing

8. H&R Block, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: H&R Block, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA