12-month performance: -40% Insider activity: Bullish Insider buying pattern: Purchases from CEO and Chairman Recent news: Solid Q1 results
When corporate insiders are buying company stock, it can pay to take note. Insiders tend to have the most up-to-date information on their companies’ prospects. Quite simply, they are the smart money.
Here, we are going to highlight 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. The company is listed on the New York Stock Exchange and currently has a market capitalization of $2.7 billion.
H & R Block: insider buying
What looks interesting here is the fact that earlier this month, two top-level insiders at H & R Block purchased stock. Form 4 filings show that on 3 September, bothPresident and CEO Jeffrey Jones and Chairman of the Board Robert Gerard purchased HRB stock. Jones bought 13,150 shares at a price of $15.04 per share while Gerard acquired 12,000 shares at a price of $15.17 per share. Combined, these insiders spent approximately $380,000 on HRB stock.
Source: 2iQ Research
This insider buying activity stands out for a couple of reasons. Firstly, these are top-level insiders that have bought stock. It’s very likely that these insiders have an information advantage over other investors.
Secondly, the purchases are substantial in size. They represent the largest amount of insider buying at H & R Block within a quarter for several years. Gerard’s purchase also increased the size of his position by 133%.
Share price weakness
H & R Block shares have underperformed this year, due to Covid-19. Year to date, the stock is down about 40%.
However, first-quarter results, issued in early September, did not look too bad. Due to the extension of the US tax season, total revenues for the quarter increased 300% to $601 million while adjusted earnings per share came in at $0.55, up from -$0.66 in the same period last year.
"Our results in the first quarter were strong, resulting in a positive start to the fiscal year," said Tony Bowen, H&R Block's CFO. "We’re in a solid financial position and are continuing the work of driving efficiencies in our business to fund our growth initiatives."
In light of these results, and the tone from management, we see the insider buying here as a bullish signal. The buying activity indicates that insiders see the stock as undervalued at present.
Disclaimer: Neither 2iQ Research GmbH nor its content providers are responsible for any damages or losses arising from any use of this information.
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