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

CAPS Rating: 3 out of 5

A financial services company, which provides tax, investment, mortgage, and accounting and business consulting services and products.


Player Avatar TSIF (99.96) Submitted: 9/2/2011 10:50:41 AM : Underperform Start Price: $15.18 HRB Score: +8.74

H&R Block, Inc, is a cyclical stock that has one profitable quarter a year, pays down it's debt and banks a nice cash balance. The other three quarters are losses of varying degrees. The market was "learning" to accept this, but stock prices still swung 50% up and down throughout the year and was almost seasonally tradeable until the IRS stopped giving data to them on the lowest risk Refund Anticipation Loan candidates and discouraged the practice all together. I thought rival Jackson Hewitt going bankrupt might help them, but the fact remains that customers of walk-in services for taxes continue and will continue to decline as online, free, and computer software programs continue to grow. Should the government, (not likely in the short run) ever simplify the tax system then business will bottom hard for H&R Block. Possible changes to deductions may change the long form/short form mix as well.

H&R Block's only growth potential is acquisitions and that can only take them so far. H&R block was in the middle of their seasonal stock price upswing after last quarter's tax season profits, but the economy has painted a target on them as Q2 losses exceeded forcasts. Don't disappoint Mr. Market if you have no long term catalysts in the middle of one of his mood swings.

H&R Block, from a "short perspective" may have some divisional sells or small acquistions to shake the stock and rattle the shorts from time to time, but I can't see much upward momentum as far as the eye can see.

Featured Broker Partners