HRB - Embedded Expectations Analysis - 2019 08 13
H&R Block, Inc. (HRB:USA) currently trades well below corporate averages relative to UAFRS-based (Uniform) Earnings, with a 12.6x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management is concerned about their capital return strategy, margins, and growth.Specifically, management may be concerned about the progress they have made on achieving their 5-pillar strategy, and they may be concerned about the sustainability of their recent share repurchase program. Furthermore, they may lack confidence in the Wave platform's ability to effectively invoice and track receipts, and they may be exaggerating the value of their interest free refund advance. Additionally, management may be concerned about the value of their accelerated spend on technology investments, and they may lack confidence in their ability to reach their long-term EBITDA margin goals. Finally, management may be exaggerating the opportunity they see to cross sell Wave and core H&R Block products, and they may lack confidence in their ability to sustain recent market share growth in the DIY market.
H&R Block provides assisted, do-it-yourself, and virtual tax return preparation solutions through various channels (including in-person, online and mobile applications, virtual, and desktop software) and distributes the company-branded products and services to the general public in the U.S., Canada, Australia, and their respective territories. The company also provides additional services, such as Refund Transfers, its Peace of Mind? Extended Service Plan (POM), H&R Block Emerald Prepaid Mastercard?, H&R Block Emerald Advance? lines of credit, Tax Identity Shield?, and Refund Advance loans. For its Canadian clients the company also provides POM, H&R Block Instant Refund?, and H&R Block Pay With Refund? services.
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