H&R Block, Inc. (HRB): A Bull Case Theory

Core Thesis - H&R Block, Inc. presents a compelling investment opportunity with a current share price of $50.19 and a favorable valuation indicated by trailing and forward P/E ratios of 11.36 and 10.06 respectively [1] Financial Performance - The company is expected to report a significantly stronger Q4 performance compared to the previous year, driven by a favorable tax benefit that could increase EPS by approximately $0.50 and free up around $90 million for share repurchases [2] - H&R Block has a history of returning 100% of free cash flow to shareholders through dividends and buybacks, having deployed $430 million last year and potentially increasing to $600 million this year, which could retire about 8% of outstanding shares at an average price of $56 [3] Shareholder Returns - Share repurchases are primarily concentrated outside of the tax season, particularly in August, September, and November, creating a near-term catalyst for shareholder returns [4] - The company is expected to grow operating income by approximately 5% through modest pricing and volume improvements, with total returns potentially reaching 12-13% plus a 3% dividend, translating to a mid-teens CAGR [4] Investment Profile - H&R Block offers a low-risk, high-return profile with multiple near-term catalysts, supported by a conservative valuation, strong cash return policy, and structural upside from potential short squeezes [4] - The ongoing short interest of 9% sets the stage for a potential squeeze similar to the post-Q4 earnings reaction, enhancing the investment appeal [2][4]