HRB - Embedded Expectations Analysis - 2021 04 19
H&R Block, Inc. (HRB:USA) currently trades well below corporate averages relative to UAFRS-based (Uniform) earnings, with an 8.8x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and management may be concerned about digital tool adoption, their technology investments, and NAC in their DIY businessSpecifically, management may have concerns about the sustainability of digital tool and Assisted solution adoption momentum as well as the progress of their three strategic imperatives. Furthermore, they may lack confidence in their ability to sustain Net Average Charge (NAC) improvements in the DIY business and generate positive pre-tax earnings. Moreover, management may be concerned about their early tax season performance and the pandemic's impact on their cost structure and revenue mix. Finally, they may be exaggerating the ability of Emerald Card's new digital feature to increase mobile wallet usage and the potential of their technology investments in mobile banking
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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- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
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