Insiders tend to be value investors. If they’re buying company stock, it’s usually because they think the market is undervaluing the stock.
Here, we are going to highlight some interesting insider buying at H & R Block Inc (HRB:US). H & R Block is a financial services company that provides tax preparation services in the US, Canada, and Australia. Worldwide, it has around 12,000 offices. The company is listed on the New York Stock Exchange and currently has a market cap of around $4.75 billion.
Insider Buying at H & R Block
2iQ’s data shows that on May 19, board member Richard Johnson purchased 10,000 HRB shares at a price of $29.54 per share. This trade cost the insider $295,380 and increased his holding to 68,729 shares.
Largest Purchase in Over Seven Years
This trade is notable for a couple of reasons.
Firstly, our records show that it represents the largest purchase from an insider at H & R Block in over seven years.
Secondly, our Insider Model views the trade as bullish. As a result of this trade, H & R Block’s company score has risen to two. 10 weeks ago, its score was minus two.
H & R Block shares fell earlier in the month after the US Internal Revenue Service (IRS) said that it would launch a free, government-provided direct tax filing option in 2024. This could lead to the full-scale launch of an IRS filing system that would compete with private companies that offer tax preparation services.
The launch of an IRS filing system is no doubt a major threat to H & R Block. However, with the stock having fallen from near $50 in August last year to below $30 today, the threat may already be priced into the stock.
After the recent share price weakness, HRB looks interesting from a value investing perspective. For the financial year ending June 30, 2024, analysts expect the company to generate earnings per share of $4.01. That puts the stock on a forward-looking P/E ratio of just 7.4 right now – well below the market average.
Clearly, Mr. Johnson sees value at current levels. We view the insider buying as a bullish development.