Author Topic: HRB - H&R Block  (Read 9006 times)

mhdousa

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HRB - H&R Block
« on: October 25, 2010, 09:47:32 AM »
I've had my eye on this one for a while, but couldn't have said it any better than Saj Karsan (whose blog is fantastic, btw):
http://www.barelkarsan.com/2010/10/h-block-looks-attractive.html

What are folks' thoughts on this?

-M


ericd1

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Re: HRB - H&R Block
« Reply #1 on: October 25, 2010, 12:41:45 PM »
M-

H&R has been on my watch list for a couple of months.

I believe as you do -- the stock has been beaten up more than justified over the mortgage issue. The company is trimming payroll to cut expenses, but that won't improve profits very much.

I'm been trying to find a catalyst that will unlock some of the company's IV...So far nothing has jumped at me. However the 5%+ dividend offers a reason to start accumulating a position...

Anyone else???


ExpectedValue

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Re: HRB - H&R Block
« Reply #2 on: October 25, 2010, 12:49:36 PM »
This is one of those businesses where you really need to visit a few H&R Blocks and talk to individual tax preparers to get a feel for what's going on. Especially the ones that have been around for a while.

Just looking at the financials and making an arbitrary prediction on earnings will not cut it.

mhdousa

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Re: HRB - H&R Block
« Reply #3 on: October 25, 2010, 01:13:16 PM »
This is one of those businesses where you really need to visit a few H&R Blocks and talk to individual tax preparers to get a feel for what's going on. Especially the ones that have been around for a while.

Just looking at the financials and making an arbitrary prediction on earnings will not cut it.

Hi Tariq,
Thanks for the reply.  It sounds like you've done this and have a negative impression of the franchise.
Please let me know if I've misinterpreted your reply.
-M

ExpectedValue

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Re: HRB - H&R Block
« Reply #4 on: October 25, 2010, 01:31:01 PM »

Hi Tariq,
Thanks for the reply.  It sounds like you've done this and have a negative impression of the franchise.
Please let me know if I've misinterpreted your reply.
-M

I would just refer you to this:



That's from SumZero where they rate the ideas posted by buyside analysts. The thing that sticks out to me is that in 4 ideas, over the last 2 years, everyone has so far been wrong. And the common mistake I saw in their analysis was not enough time dedicated to actually talking to people and visiting the HRBs. Ideally you want to speak with a variety of preparers, people who have been doing it for a long time and then some of the new employees and see what kinds of dynamics are at work.

dealraker

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Re: HRB - H&R Block
« Reply #5 on: October 25, 2010, 06:49:48 PM »
Nygren and others think the clients are coming back when times get better.  I do not think they are unless the fees fall enough to make it in their best interest.  Both H & R and Jackson franchisees and store owned tend to underpay their taxpreparers which makes them unrewarded for performance/experience- thus high turnover.  Then clients are often disappointed with their service with inexperienced preparers.  It is a bad cycle that seems impossible to correct now that there is an alternative online that is just about--- yes almost--- as easy as sitting in front of a preparere that may not be well-versed.

Block and JH have been short term thinkers in a secular changing industry.


bookie71

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Re: HRB - H&R Block
« Reply #6 on: October 26, 2010, 08:38:53 AM »
If I were interested in this company, I would see if you can find out (maybe in 10K) haw much of it's revenue is from RAL's (refund anticipation loans).  These are under fire by consumer groups because of the usurious interest rates charged. On another tax service a client had me review a few years ago, this was almost 1/3 of it's gross income.
Always remember, Pigs get fat and hogs get slaughtered.

dealraker

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Re: HRB - H&R Block
« Reply #7 on: October 26, 2010, 09:45:13 AM »
It isn't how much money is RAL's as much as it is how many come to H & R because of the RAL's.  Probably a few.  The bank fees pretty much go to the banks.

bookie71

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Re: HRB - H&R Block
« Reply #8 on: October 26, 2010, 11:16:42 AM »
But isn't H & R a bank ?
Always remember, Pigs get fat and hogs get slaughtered.

Uccmal

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Re: HRB - H&R Block
« Reply #9 on: October 26, 2010, 02:46:24 PM »
I held HRB for awhile when I was test running the Magic Formula.  Shortly after I bought it they had to restate their corporate tax returns and pay alot of back taxes.  That was the kicker for me and I quickly unloaded it.  I am surprised, and not surprised, that it still appears on value screens five years later.  They were years slow bringing out an online service.  There was huge potential that they missed completely.
GARP tending toward value