A History of Outperforming Analyst Forecasts and Beating the Odds: H&R Block Inc. (HRB)

H&R Block Inc. (NYSE: HRB) stock jumped 15.29% on Friday to $45.47 against a previous-day closing price of $39.44. With 5.03 million shares changed hands, the volume of the stock remained heavier than its average volume of 2.42 million shares. During the session, the Personal Services company that operates in wider Consumer Cyclical sector, reached to the highest price of $45.72 whereas the lowest price it dropped to was $41.00. The 52-week range on HRB shows that it touched its highest point at $40.60 and its lowest point at $21.08 during that stretch. It currently has a 1-year price target of $33.75. With its current market cap of 7.20 billion, HRB has annualized dividend of $1.08 while the current yield stands at 2.38%. Beta for the stock currently stands at 0.69.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of HRB was up-trending over the past week, with a rise of 14.13%, but this was up by 23.63% over a month. Three-month performance surged to 91.29% while six-month performance rose 85.52%. The stock gained 80.72% in the past year, while it has gained 93.00% so far this year. A look at the trailing 12-month EPS for HRB yields 1.19 with Next year EPS estimates of 3.15. For the next quarter, that number is 1.24. This implies an EPS growth rate of -84.20% for this year and -9.01% for next year. EPS is expected to grow by 10.00% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of -24.20%.

Float and Shares Shorts:

At present, 162.78 million HRB shares are outstanding with a float of 157.57 million shares on hand for trading. On Jul 14, 2022, short shares totaled 9.69 million, which was 6.07% higher than short shares on Jun 14, 2022. In addition to Mr. Jeffrey J. Jones II as the firm’s Pres, CEO & Director, Mr. Tony G. Bowen serves as its Chief Financial Officer.

Institutional Ownership:

Through their ownership of 92.99% of HRB’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 57.86% of HRB, in contrast to 35.10% held by mutual funds. Shares owned by individuals account for 10.67%. As the largest shareholder in HRB with 12.67% of the stake, The Vanguard Group, Inc. holds 20,219,599 shares worth 20,219,599. A second-largest stockholder of HRB, BlackRock Fund Advisors, holds 17,472,643 shares, controlling over 10.95% of the firm’s shares. Jupiter Asset Management Ltd. is the third largest shareholder in HRB, holding 11,063,218 shares or 6.93% stake. With a 2.95% stake in HRB, the Vanguard Total Stock Market Index is the largest stakeholder. A total of 4,708,351 shares are owned by the mutual fund manager. The iShares Core S&P Mid Cap ETF, which owns about 2.88% of HRB stock, is the second-largest Mutual Fund holder. It holds 4,597,477 shares valued at 162.38 million. iShares Tr. – Select Dividend ETF holds 2.68% of the stake in HRB, owning 4,282,778 shares worth 151.27 million.

An Overview of Recent Financials:

Understanding a company as a customer does not mean you will understand it as an investor. The wise investor uses quantitative research to analyze metrics such as revenue, net income, and earnings. In its fiscal quarter reported on Mar 30, 2022, HRB reported revenue of $2.06B and operating income of $885.37M. It generated $673.18M net income for the quarter, which came to $583.79M over the last twelve months. The EBITDA in the recently reported quarter was $921.72M and diluted EPS was $4.05. EBITDA for the full year was $932.46M.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for HRB since 5 analysts follow the stock currently. There are 2 analysts who recommend BUY ratings, while 1 suggest SELL ratings. Of the remaining analysts, 2 believe that the stock is worth HOLDING, 0 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With HRB analysts setting a high price target of $48.00 and a low target of $22.60, the average target price over the next 12 months is $39.65. Based on these targets, HRB could surge 5.56% to reach the target high and fall by -50.3% to reach the target low. Reaching the average price target will result in a decline of -12.8% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. HRB will report FY 2023 earnings on 08/08/2023. Analysts have provided yearly estimates in a range of $3.82 being high and $3.54 being low. For HRB, this leads to a yearly average estimate of $3.75. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. H&R Block Inc. surprised analysts by $0.19 when it reported $1.43 EPS against a consensus estimate of $1.24. The surprise factor in the prior quarter was $0.36. Based on analyst estimates, the high estimate for the next quarter is -$0.80 and the low estimate is -$1.14. The average estimate for the next quarter is thus -$0.90.

Summary of Insider Activity:

Insiders traded HRB stock several times over the past three months with 0 Buys and 8 Sells. In these transactions, 0 shares were bought while 28,808 shares were sold. The number of buy transactions has increased to 20 while that of sell transactions has risen to 18 over the past year. The total number of shares bought during that period was 333,081 while 199,106 shares were sold.

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