HRB: Monitor H&R Block Before Buying In

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H & R Block Inc (HRB) stock fell to a three-year low after reporting second-quarter earnings. Could this dip be a buying opportunity, or is HRB in need of an audit?

H&R Block – Company Overview

H&R Block HRBH&R Block is one of the country’s leading tax-preparation companies. With roots that go back to 1955, H&R Block has grown into a global business that prepares nearly 25 million tax returns worldwide and brings in over $3 billion in sales.

H&R Block currently operates about 11,000 retail tax offices in the U.S. and another 1,700 across Canada, Australia and Brazil. At current prices, H&R Block has a 2.5% annual dividend yield.

H&R Block – Earnings Rundown

For the second quarter H&R Block reported an adjusted loss from continuing operations of 45 cents per share. This missed analysts’ estimates of 42 cents per share and exceeded last year’s loss of 42 cents per share.

HRB stock’s total revenue climbed to $135 million, below analysts’ estimates of $142 million. Looking ahead to the third quarter, analysts estimate loss of 10 cents per share and average revenue of $519.68 million. H&R Block also declared its quarterly cash dividend of 20 cents per share to be paid on Jan. 2, 2015.

H&R Block – Current Ratings

H&R Block’s ratings have been fluctuating quite a bit over the past 12 months. During that time, HRB stock has been rated a “hold,” a “sell” and a “buy.” Just two weeks ago, H&R Block was upgraded from a “hold” to a “buy,” which can be attributed to HRB stock’s steady buying pressure. H&R Block earns a solid B grade for its Quantitative Grade.

Of the eight fundamental metrics I graded H&R Block on, HRB stock excels in return on equity (A), earnings momentum (A), operating margin growth (B) and cash flow (B). H&R Block needs to improve in all other metrics earning lackluster C-grades in sales growth, earnings growth, earnings surprises and analyst earnings revisions. Overall, HRB stock earns a B for its Fundamental Grade.

As of this posting, Dec. 10, I consider HRB stock a B-rated “(Cautious) Buy.” H&R Block is volatile, and while the current fundamental and quantitative analysis are solid, the latest rating bump is fairly new. I would recommend monitoring HRB stock closely before jumping in.

Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip GrowthEmerging GrowthUltimate GrowthFamily Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.


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