H&R Block
HRB
$50.08
+4.70%
H&R Block, Inc. is a tax services company that provides assisted income tax return preparation through company-owned and franchise offices, digital do-it-yourself tax software, and adjacent financial products such as Refund Transfers, the Emerald Card, and Peace of Mind guarantees, operating primarily in the United States with additional presence in Canada and Australia. It is the incumbent brand in U.S. retail tax preparation, competing against Intuit's TurboTax in digital and against a fragmented field of independent preparers and CPA firms in assisted filing, with a competitive identity built on a national store footprint, a large seasonal workforce, and a franchise royalty model rather than on software-led disruption. The current investor narrative centers on capital returns and cash generation rather than top-line growth: management's aggressive share repurchases and a roughly 10% dividend increase have reframed HRB as an income and buyback story, reinforced by a strong fiscal Q4 2026 print in mid-August that drove a sharp single-day re-rating. The debate is whether modest revenue growth (roughly 3% year over year) and a structurally challenged assisted-filing business can sustain earnings-per-share compounding through buybacks alone, with sell-side opinion split between a persistent bear (Goldman Sachs at Sell) and a constructive bull (Barrington at Outperform).…
HRB
H&R Block
$50.08
Related headlines
Investment Opinion: Should I buy HRB Today?
Rating: Buy (moderate conviction, income-and-value orientation). The thesis is that HRB's 15.6% FCF yield, 4.36% dividend yield, and 6.59x trailing earnings price in a decline that the cash flows do not support, while buybacks at these multiples mechanically compound per-share value; the $51.67 average analyst target implies only +6.2% upside, but that target understates the total return including the dividend and buyback yield. The split coverage — Barrington at Outperform, Goldman at Sell — reflects a genuine debate about durability rather than a consensus mispricing.
Supporting evidence: trailing free cash flow of $756.1 million against a $4.84 billion market cap (15.6% FCF yield); revenue growth of 3.05% in Q4 2026 with gross margin expanding to 72.36% from 52.03%; debt-to-equity down to 17.89% from 26.41% with 24.3x interest coverage; and a 4.36% dividend yield backed by a 28.8% payout ratio. Against sector norms in the high-teens to low-twenties on earnings, the 6.59x PE and 5.66x EV/EBITDA represent a deep discount that is partly justified by low growth and seasonality but appears to over-penalize a deleveraging, cash-generative franchise.
The biggest risks that could invalidate the thesis are (1) accelerated assisted-filing volume loss to digital competitors, which would shrink the $1.742 billion core faster than buybacks offset; (2) a weak tax season compressing Q3 2026 earnings and forcing a buyback slowdown; and (3) multiple compression toward the 4.12x historical low. This Buy would downgrade to Hold if revenue growth turns negative or gross margin at the seasonal peak falls below 65%, and to Sell if buybacks are cut or the stock breaks the $40.34 September low. Verdict: undervalued relative to its own history and peers on cash-flow metrics, but fairly valued on earnings-growth-adjusted terms — the return comes from cash distribution, not rerating.
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HRB 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on H&R Block's 12-month outlook, with a consensus price target around $51.67 and implied upside of +3.2% versus the current price.
Average Target
$51.67
0 analysts
Implied Upside
+3.2%
vs. current price
Analyst Count
—
covering this stock
Price Range
$36 - $60
Analyst target range
Coverage is thin, with only 3 analysts contributing to the consensus, and the recommendation field is reported as "none," meaning no standardized Buy/Hold/Sell distribution is available from the data. The average target price is $51.67, implying roughly +6.2% upside from the $48.67 current price, with consensus EPS estimates of $8.22 (range $8.17-$8.27) and revenue estimates of $4.518 billion (range $4.496-$4.538 billion). The institutional ratings history shows a polarized split rather than a consensus: Barrington Research has maintained Outperform repeatedly (most recently August 12, 2026), while Goldman Sachs has maintained Sell through the same period, so sentiment is best characterized as neutral-to-mixed with a slight bullish tilt from the average target.
The target range of $36.00 to $60.00 is wide — the low implies about -26% downside and the high about +23% upside from the current price — signaling genuine disagreement about the durability of the buyback-driven EPS story. The $60 high target likely assumes sustained double-digit EPS growth from repurchases, stable assisted-filing volumes, and some multiple re-rating toward high-single-digit earnings, while the $36 low target prices in continued share loss to digital competitors, margin compression, and a return to the lower end of the historical multiple band. With only 3 analysts and no rating changes beyond the persistent Barrington/Goldman split, price discovery is less efficient than for large-cap peers, and the wide spread argues for position sizing that respects the binary nature of the bull/bear case rather than anchoring on the average target.
Bulls vs Bears: HRB Investment Factors
The bull case currently has stronger evidence: a 15.6% FCF yield, 4.36% dividend yield, 17.89% debt-to-equity, and 6.59x trailing PE describe a cash machine priced for decline, and the six-month +51.34% move with a higher-low structure at $40.34 suggests the market is beginning to agree. The bear case rests on the durability question — 3.05% revenue growth, a $215.2 million digital business dwarfed by $1.742 billion in assisted fees, and a single quarter that carries the entire year's earnings. The most important tension is whether buyback-driven EPS compounding can continue to outrun assisted-filing volume erosion; if repurchases at these multiples keep shrinking the share count while tax-season margins hold above 70% gross, the stock can compound double digits, but if the core franchise loses volume faster than buybacks offset, the low multiple is a value trap. Analyst dispersion ($36 to $60) and the Goldman Sell/Barrington Outperform split confirm this is a binary debate about business durability, not valuation arithmetic.
Bullish
- Extreme FCF yield near 15.6%: Trailing free cash flow of $756.1 million against a roughly $4.84 billion market cap produces an FCF yield of about 15.6%, an extraordinary cash-return engine for a business with only 3.05% revenue growth. This cash generation fully funds the $53.2 million quarterly dividend and the $412.4 million of Q1 2026 buybacks without straining the balance sheet.
- Valuation at deep discount to sector: At 6.59x trailing and 7.03x forward earnings, 1.23x sales, and 5.66x EV/EBITDA, HRB trades at a fraction of the high-teens-to-low-twenties PE norms for the Personal Products & Services industry. The 4.36% dividend yield with a conservative 28.8% payout ratio means the market is pricing in near-zero growth while the company still compounds EPS through repurchases.
- Balance sheet deleveraging rapidly: Debt-to-equity fell to 17.89% from 26.41% a year earlier, interest coverage stands at 24.3x, and the current ratio is 1.133, so the capital-return program is not leverage-dependent. Q4 2026 interest expense of $15.5 million against $376.8 million of operating income leaves substantial cushion even in a weak tax season.
- Momentum and post-earnings re-rating: The stock has climbed 51.34% over six months and 15.66% over three months versus the S&P 500's +7.48% and +2.69%, with relative strength of +43.86 and +12.97 respectively. The August 12 gap from $46.67 to $54.18 on heavy volume, followed by a higher low at $40.34 in September and a fresh leg to $48.67, shows buyers defending the new range.
Bearish
- Structural share loss to digital DIY: Digital DIY fees of $215.2 million and Wave HQ at $29.9 million remain subscale against $1.742 billion of assisted tax preparation fees, meaning the growth segment is too small to offset any erosion in the core. Revenue growth of just 3.05% in Q4 2026 and a similar low-single-digit pace in Q3 2026 shows the franchise is not converting digital investment into acceleration.
- Earnings entirely dependent on one quarter: Q2 2026 lost $242.2 million and Q1 2026 lost $165.8 million, while Q3 2026 alone earned $847.9 million — the entire fiscal year hinges on a single tax season. Any weather event, IRS filing delay, or competitive promotion during February-April would hit the full-year EPS disproportionately, and the reported -32.66% operating margin in the metrics set illustrates how distorted headline figures become.
- Analyst targets imply minimal upside: The $51.67 average target offers only about +6.2% upside from $48.67, and the range of $36 to $60 spans -26% to +23%, signaling genuine disagreement rather than conviction. Coverage is thin at 3 analysts with no standardized recommendation distribution, and Goldman Sachs has maintained a Sell rating through the same period Barrington held Outperform.
- Multiple expansion historically unreliable: HRB's trailing PE has ranged from 4.12x at the Q4 2026 print date to 7.40x at fiscal year-end 2024, and the market has repeatedly refused to re-rate the name above high-single-digit earnings multiples. With forward EPS of $8.22 versus trailing EPS of roughly $7.39, the implied growth is modest, so returns must come from buybacks and dividends rather than rerating.
HRB Technical Analysis
H&R Block is in a recovery uptrend rather than a sustained one: the stock is down 5.18% over the trailing year, materially lagging the S&P 500's +15.53% (a relative strength of -20.71 over 12 months), yet it has climbed 51.34% over six months and 14.22% year to date. At $48.67 the shares sit at roughly 69.6% of the 52-week range between a $28.16 low and a $58.67 high, a positioning that reflects improving momentum but leaves meaningful overhead supply before the prior peak is reclaimed. The 46.11% maximum drawdown in the trailing window underscores how violent the prior de-rating was, and the current advance should be treated as a repair phase rather than a confirmed new high regime.
Short-term momentum is clearly accelerating and diverging positively from the 12-month trend: the stock is up 7.89% in the last month and 15.66% in three months versus the S&P 500's +1.22% and +2.69%, producing relative strength readings of +6.67 and +12.97 respectively. The most important technical event was the mid-August gap following fiscal Q4 results, when the stock jumped from $46.67 on August 11 to $54.18 on August 12 on heavy volume, and the subsequent September pullback to $40.34 found buyers before a fresh October leg higher to $48.67. That higher-low structure, combined with the latest session's +0.75% gain on roughly 1.76 million shares, suggests the post-earnings buyers remain in control, though the stock is now approaching the underside of the August/September supply zone.
Key resistance sits at the $54.18 post-earnings spike high and the $58.67 52-week high, while support is anchored at the $40.34 September swing low and, more distantly, the $28.16 52-week low. A decisive close above $54 would confirm the recovery as a new uptrend and open a retest of $58.67, whereas a break of $40 would invalidate the higher-low sequence and refocus the $28-32 area that held in April and May. Volatility is unusually low for an equity: beta of 0.393 implies roughly 60% less market sensitivity than SPY, which supports larger position sizing on a risk-adjusted basis but also means the stock's sharp moves are idiosyncratic (earnings- and buyback-driven) rather than market-driven, so event risk deserves more weight than index hedging.
Beta
0.39
0.39x market volatility
Max Drawdown
-46.1%
Largest decline past year
52-Week Range
$28-$59
Price range past year
Annual Return
-4.4%
Cumulative gain past year
| Period | HRB Return | S&P 500 |
|---|---|---|
| 1m | +16.8% | -1.2% |
| 3m | +22.7% | +3.4% |
| 6m | +65.5% | +7.0% |
| 1y | -4.4% | +14.4% |
| ytd | +17.5% | +12.0% |
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HRB Fundamental Analysis
Revenue is growing modestly rather than accelerating: fiscal Q4 2026 (quarter ended June 30, 2026) revenue was $1.145 billion, up 3.05% year over year from $1.111 billion, while the seasonally dominant fiscal Q3 2026 quarter delivered $2.398 billion versus $2.277 billion a year earlier, a similar low-single-digit pace. The segment mix shows the core U.S. assisted business still dominates, with Tax Preparation Fees of $1.742 billion and Refund Transfer Revenues of $119.9 million, while digital DIY fees of $215.2 million and the Wave HQ acquisition at $29.9 million represent the growth-oriented but still subscale pieces. The implication is that the investment case rests on pricing and cost discipline in a mature category rather than volume-led expansion, and any acceleration would have to come from digital share gains or ancillary products like Emerald Card ($39.6 million) and Peace of Mind ($14.3 million).
Profitability is highly seasonal but strong at the peak: Q4 2026 net income was $293.7 million on a 25.65% net margin and a 72.36% gross margin, with operating income of $376.8 million (32.91% operating margin), while Q3 2026 produced $847.9 million of net income at a 35.36% net margin and 56.97% gross margin. The off-season quarters are structurally loss-making — Q2 2026 lost $242.2 million and Q1 2026 lost $165.8 million — which is normal for this business but means trailing metrics are distorted; the reported operating margin of -32.66% in the key metrics set is an artifact of period mismatch and should be disregarded in favor of the quarterly statements. Year-over-year, Q4 gross margin improved sharply to 72.36% from 52.03%, and Q4 operating income rose to $376.8 million from $371.3 million despite higher revenue, indicating modest margin expansion at the seasonal peak.
The balance sheet is the strongest part of the story: debt-to-equity is 17.89% (versus 26.41% a year earlier), the current ratio is 1.133, and interest coverage was 24.3x in the latest fiscal year, while trailing free cash flow reached $756.1 million against a market cap of roughly $4.84 billion — an FCF yield near 15.6%. Cash flow is extremely seasonal (operating cash flow of +$1.558 billion in Q3 2026 versus -$614.0 million in Q2 2026), but the full-year picture shows the company self-funding growth, dividends ($53.2 million paid in Q4), and buybacks ($100.2 million repurchased in Q4 and $412.4 million in Q1 2026). ROE of 6.24% looks low only because of the thin book equity created by decades of repurchases (price-to-book of 41.2x), and the 4.36% dividend yield with a 28.8% payout ratio leaves ample room for continued capital returns.
Quarterly Revenue
$1.1B
2026-06
Revenue YoY Growth
+3.0%
YoY Comparison
Gross Margin
72.4%
Latest Quarter
Free Cash Flow
$756081000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is HRB Overvalued?
Because net income is positive, the PE ratio is the primary metric: HRB trades at 6.59x trailing earnings and 7.03x forward earnings, an unusually low absolute multiple that reflects the market's skepticism about the durability of tax-season earnings rather than distress. The narrow gap between trailing and forward PE implies the market is not pricing in meaningful earnings growth — forward EPS estimates of $8.22 versus trailing EPS of roughly $7.39 suggest only modest expansion — so the valuation is a cash-return story, not a growth story.
Against the Personal Products & Services industry, the discount is stark: a trailing PE of 6.59x and price-to-sales of 1.23x compare with sector norms that typically run in the high-teens to low-twenties on earnings, and EV/EBITDA of 5.66x and EV/Sales of 1.80x are similarly depressed. The discount is partly justified — low-single-digit revenue growth, a mature assisted-filing franchise facing digital substitution, and extreme seasonality — but a 4.36% dividend yield, 15.6% FCF yield, and 24x interest coverage suggest the market is over-penalizing a highly cash-generative, deleveraging business. The PEG ratio of 0.24 is mechanically low and not a reliable signal given the cyclicality of the earnings base.
Historically, HRB's own multiple band has been wide and noisy because of the seasonal earnings base: trailing PE was 6.15x at fiscal year-end 2025 and 4.12x at the Q4 2026 print date, versus 7.40x at fiscal year-end 2024, while price-to-sales has ranged from roughly 1.68x to 6.62x across recent periods. At 6.59x earnings and 1.23x sales, the stock sits in the lower half of its own historical range, consistent with a value opportunity rather than fundamental deterioration — but the market has repeatedly refused to re-rate this name above high-single-digit earnings multiples, so multiple expansion should not be relied upon as a return driver.
PE
6.6x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 1x~7x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
5.7x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks center on extreme seasonality and concentration: Q3 2026 generated $847.9 million of net income while Q2 2026 lost $242.2 million and Q1 2026 lost $165.8 million, so the entire fiscal year's earnings depend on the February-April tax season. Revenue growth of just 3.05% in Q4 2026 means there is little top-line buffer, and the core U.S. assisted business — $1.742 billion of tax preparation fees plus $119.9 million of Refund Transfer revenues — dwarfs digital DIY at $215.2 million and Wave at $29.9 million. The buyback program ($412.4 million in Q1 2026, $100.2 million in Q4) is the primary EPS driver, so any pause in repurchases or a higher share price would slow the compounding that justifies the thesis. Interest coverage of 24.3x and debt-to-equity of 17.89% mitigate balance-sheet risk, but the 28.8% payout ratio and $53.2 million quarterly dividend leave less room if tax-season cash flow disappoints.
Market and competitive risks are dominated by digital substitution and a valuation that the market has never trusted: Intuit's TurboTax competes directly against HRB's $215.2 million digital DIY segment, and the assisted-filing franchise faces a fragmented field of independent preparers and CPA firms. The 6.59x trailing PE and 1.23x sales multiple are discounts to high-teens-to-low-twenties sector norms, but HRB's own PE has ranged from 4.12x to 7.40x in recent periods, so multiple compression toward the low end alone would cost roughly 37% of the price even with flat earnings. Beta of 0.393 means the stock is largely insulated from index moves, but that also means the sharp moves are idiosyncratic — the August 12 gap from $46.67 to $54.18 and the September slide to $40.34 were earnings- and buyback-driven, not macro-driven. Thin coverage (3 analysts) and the persistent Goldman Sell rating mean negative revisions can move the stock disproportionately.
Worst-case scenario: a weak tax season — IRS filing delays, adverse weather in key markets, or aggressive TurboTax pricing — compresses Q3 2026 earnings, forcing management to slow buybacks just as the multiple compresses toward its 4.12x historical low. Combined with a digital share-loss narrative, the stock could retest the $36 analyst low target, a roughly -26% decline from $48.67, and in a severe de-rating revisit the $28.16 52-week low, about -42%. The 46.11% maximum drawdown in the trailing window is the empirical precedent for how far this name can fall, and the $40.34 September swing low is the first technical warning level — a break there would invalidate the higher-low structure and refocus the $28-32 area that held in April and May.
FAQ
The most severe risk is earnings concentration: Q3 2026 generated $847.9 million of net income while Q2 2026 lost $242.2 million and Q1 2026 lost $165.8 million, so a single weak tax season — IRS delays, weather, or TurboTax promotions — would hit full-year EPS disproportionately. Second is structural competitive risk: digital DIY fees of $215.2 million and Wave at $29.9 million are subscale against $1.742 billion of assisted tax preparation fees, so digital cannot yet offset core erosion. Third is valuation/multiple risk: the 6.59x PE could compress toward the 4.12x historical low, costing roughly 37% even with flat earnings, and thin 3-analyst coverage with a persistent Goldman Sell rating amplifies negative revisions. Fourth is capital-return dependence: the buyback ($412.4 million in Q1 2026) is the main EPS driver, so any slowdown in repurchases would stall the compounding story.
The 12-month outlook has three scenarios: a 50% base case of $50-54, aligned with the $51.67 analyst average, where low-single-digit revenue growth and peak margins near 70% gross support the dividend and buyback; a 25% bull case of $58-60, aligned with the $60 analyst high, requiring buyback-driven EPS beats and a decisive break above the $54.18 August high toward the $58.67 52-week high; and a 25% bear case of $36-40, aligned with the $36 analyst low, where a weak tax season forces a buyback slowdown and the multiple compresses toward 4.12x. The base case is most likely because it requires only that the status quo persist — 3% revenue growth, 35% peak net margins, and continued repurchases — rather than any acceleration or rerating. The key assumption behind it is that assisted-filing volumes stay roughly flat and management keeps returning cash at the current pace.
HRB screens undervalued on cash-flow metrics: 6.59x trailing and 7.03x forward earnings, 1.23x sales, 5.66x EV/EBITDA, and a 15.6% FCF yield compare with sector norms in the high-teens to low-twenties on earnings. Against its own history the stock sits in the lower half of its range — trailing PE has run from 4.12x at the Q4 2026 print date to 7.40x at fiscal year-end 2024 — so the market is paying a discount, not a premium. The discount is partly earned: 3.05% revenue growth, a mature assisted-filing franchise facing digital substitution, and single-quarter earnings seasonality justify a below-market multiple. What the valuation implies is that the market expects little to no earnings growth and doubts the durability of tax-season cash flow; if buybacks keep shrinking the share count and peak margins hold above 70% gross, the multiple looks too low, but rerating above high-single-digit earnings has historically not persisted.
From a risk/reward perspective, HRB offers a favorable setup for value and income investors: at $48.67 it trades at 6.59x trailing earnings with a 15.6% FCF yield and a 4.36% dividend yield, while the $51.67 average analyst target implies about +6.2% price upside plus the dividend. The downside is quantifiable — the $36 analyst low target is roughly -26% and the $28.16 52-week low about -42% — and the 17.89% debt-to-equity and 24.3x interest coverage limit balance-sheet risk. The catch is that the entire thesis depends on buybacks continuing at a $400 million-plus quarterly pace while the 3.05%-growth core holds, and only 3 analysts cover the name with a Goldman Sell/Barrington Outperform split. It is a good buy for patient income-oriented investors with a 12-24 month horizon who can tolerate a weak tax season, not for growth investors seeking revenue acceleration.
HRB is better suited to medium-to-long-term holding than short-term trading: the return is built from a 4.36% dividend yield plus buyback-driven EPS compounding, which requires time to accumulate, and the beta of 0.393 means the stock does not offer the volatility that short-term traders typically seek. Earnings visibility is high within a fiscal year but concentrated in one quarter, so the stock's sharp moves are event-driven — the August 12 gap from $46.67 to $54.18 and the September slide to $40.34 — making entry timing around tax-season prints more important than daily trading. The 46.11% maximum drawdown in the trailing window shows the downside risk of a poorly timed entry, and the 28.8% payout ratio with a recent 10% dividend increase supports a multi-year income thesis. A suggested minimum holding period is 12-24 months, long enough to capture at least one full tax season and several buyback quarters.