NEW YORK (TheStreet) -- Shares of H&R Block Inc. (HRB) are up 6.79% to $30.35 in pre-market trade after the tax preparation and banking services company said it would sell its bank unit to BofI Federal Bank.
BofI Holding, Inc. (BOFI) is a holding company for BofI Federal Bank. Their shares jumped 11.84% to $83.25 overnight.
TheStreet Ratings team rates BLOCK H & R INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate BLOCK H & R INC (HRB) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and relatively poor performance when compared with the S&P 500 during the past year."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has increased to -$627.95 million or 15.69% when compared to the same quarter last year. In addition, BLOCK H & R INC has also vastly surpassed the industry average cash flow growth rate of -135.67%.
- HRB, with its very weak revenue results, has greatly underperformed against the industry average of 0.2%. Since the same quarter one year prior, revenues plummeted by 57.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Diversified Consumer Services industry. The net income has significantly decreased by 1112.5% when compared to the same quarter one year ago, falling from -$17.71 million to -$214.71 million.
- Currently the debt-to-equity ratio of 1.60 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, HRB has a quick ratio of 0.54, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
- You can view the full analysis from the report here: HRB Ratings Report