H&R Block Stock Looks Unlikely To Bounce Soon After 5% Drop Last Week

by Trefis Team
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The stock price of H&R Block Inc. (NYSE: HRB) reached its 52-week high of $27 in June 2021, but has since dropped from that level. Further, the stock fell 5% in the past week, to levels of around $25 currently. However, H&R Block, a tax preparation company, reported strong earnings for Q1 2022 in early August (HRB’s fiscal year ends in April), with revenues jumping to $466 million, up from $291 million in Q1 2021. Lower COGS and operating expenses outweighed a rise in the effective tax rate, leading to a turnaround in the company’s profitability from a $10 million loss in Q1 ’21 to a $90 million profit in Q1 ’22. This led to a jump in EPS from -$0.06 to $0.49 over this period.

Now, after a 5% fall in a week, will HRB stock continue its downward trajectory over the coming weeks, or is a recovery in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in the company’s stock price using ten years of historical data, returns for HRB stock average just 1.2% in the next one-month (twenty-one trading days) period after experiencing a 5.4% drop over the previous week (five trading days).

But how would these numbers change if you are interested in holding HRB stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test H&R Block stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just 1 day!

MACHINE LEARNING ENGINE – try it yourself:

IF HRB stock moved by -5% over five trading days, THEN over the next twenty-one trading days HRB stock moves an average of 1.2%, with an average 58.7% probability of a positive return over this period.

Some Fun Scenarios, FAQs & Making Sense of H&R Block Stock Movements:

Question 1: Is the average return for H&R Block stock higher after a drop?

Answer: Consider two situations,

Case 1: H&R Block stock drops by 5% or more in a week

Case 2: H&R Block stock rises by 5% or more in a week

Is the average return for H&R Block stock higher over the subsequent month after Case 1 or Case 2?

H&R Block stock fares better after Case 1, with an average return of 1.2% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of just 0.8% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.

Try the Trefis machine learning engine above to see for yourself how HRB stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer: If you buy and hold H&R Block stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!

For HRB stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:

You can try the engine to see what this table looks like for HRB after a larger loss over the last week, month, or quarter.

Question 3: What about the average return after a rise if you wait for a while?

Answer: The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks.

It’s pretty powerful to test the trend for yourself for H&R Block stock by changing the inputs in the charts above.


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