HRB: H&R Block Inc Stock Analysis

H&R Block Inc (HRB) via its subsidiaries involves tax preparation and other services to the
public in the US, Australia and Canada. This firm offers assisted income tax return preparation
and related services via a system of retail offices operated by companies or by franchisees.
Online income tax preparation software solutions and provides a range of online tax services
including preparation of federal and state income tax returns. Company also developed DIY
income tax preparation software and third party retail stores and direct mail.
H&R Block Inc was founded in 1946 and is headquartered in Kansas City, Missouri.
Analysis of Results
HRB has focused on arresting client decline and fall in costs in fiscal 2017. Revenue fell US
$40.5 million or 1.3% in FY16 to over US$3 billion primarily due to lower return volume, the
impact of divestiture of the H&R Block Bank and the impact of foreign currency exchange rate
fluctuations. This is offset by a rise in price and improved form.
Company has also announced a 10 percent increase in dividend and review of the same on an
annual basis. H&R Block Inc (NYSE: HRB) is the largest consumer tax service provider and
total revenues fell USD 40.5 million or 1.3 % to just USD 3.0 billion.
Lower client volume of 4.1 % and impact of divestiture of the Block Bank and foreign currency
exchange rate fluctuations . This was offset by rise in prices and improved form mix.
Company's net income totalled US $374.3 million while adjusted EBITDA margin from
continuing operations was 28%. GAAP earnings per share declined US$0.22 to $1.53.
HRB president and CEO Bill Cobb has said the company is "committed to arresting the client
decline and ultimately achieving client growth." The firm is aiming for aggressive plans for tax
season 2017.
Company is aiming for strategic changes resulting in positive sense over the short and long term.
Strong cash flow and healthy margins are now the focus of the company.
Total operating expenses rose USD $121 million or 5.3 %. The rise in operating expenses was
due to occupancy cost and amortisation expense which has expanded as a consequence of
acquisition of franchisees and independent tax preparation businesses.
It also features rising market expenses and fees pertaining to divestiture and capital structure
changes. Increase were offset by decrease in tax return volume, compensation and benefits.

Financial reporting changes led to other income rise by US $16.4 million. Interest expense rose
USD 23.7 million from 2015 due to issuance of USD 1 billion of long term debt in September
2015.
Conclusion
HRB is a strong SELL in current times with increasing losses and less chances of growth. This is
why the company is perceived by analysts as not capable of outperforming the market.
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