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Sundeep Kutumbaka and George Bocchetti. H&R Block, Inc. (HRB) Align Technology, Inc. (ALGN). H&R Block: Recommendation. Buy: Limit at $18 Sell: Stop at $20, Limit at $22. H&R Block: Background. Provides tax, banking, accounting and business consulting services and products

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Sundeep kutumbaka and george bocchetti

Sundeep Kutumbaka and George Bocchetti

H&R Block, Inc. (HRB)Align Technology, Inc. (ALGN)


H r block recommendation
H&R Block: Recommendation

  • Buy: Limit at $18

  • Sell: Stop at $20, Limit at $22


H r block background
H&R Block: Background

  • Provides tax, banking, accounting and business consulting services and products

    • Prepares 1/7 tax returns

    • Had an office within 5 miles of most Americans

    • Employs more than 110,000

    • Has helped clients obtain nearly $30 billion in tax refunds, credits

  • Founded in 1955

  • Headquartered in Kansas City, MO


H r block what they do
H&R Block: What They Do

  • Tax Services = 74.3% of revenue

    • Provides tax return preparation services in Unites States, Canada, Australia

    • Markets TaxCut income tax preparation software

  • Business Services = 22% of revenue

    • RSM McGladrey, Inc. (RSM) provides accounting, tax and business consulting services

  • Consumer Financial Services = 3.5% of revenue

    • provides retail banking offerings through HRB Bank


H r block basic numbers
H&R Block: Basic Numbers

  • Current Price: $18.08

  • P/E Ratio: 12.07

  • Beta: 0.49

  • Dividend/ Yield: $0.15/ 3.32%

  • EPS: $1.50

  • 52-Week Low: $13.73

  • 52-Week High: $25.94

  • Market Cap: $6.60B

  • Institutional Ownership: 85%

    Taken from http://www.google.com/finance?q=hrb as of 10/04/09






Hrb vs competitors 1 month hrb vs jtx gtax intu
HRB vs. Competitors, 1 Month (HRB vs JTX, GTAX, INTU)


Hrb vs competitors 3 months hrb vs jtx gtax intu
HRB vs. Competitors, 3 Months (HRB vs JTX, GTAX, INTU)


H r block earnings report
H&R Block: Earnings Report

  • Loss of $130.6 million, or 39 cents per share

    • Vs. loss of $128.4 million, 39 cents per share a year before

    • Vs. estimates of loss of 37 cents per share

  • Typically lose in Q1, Q2 and gain in Q3, Q4

    • Taxes are seasonal: most revenue from Jan-April

  • Exacerbated by increase in Tax Services expense

  • Reaffirmed guidance for FY10

  • Upgraded September 8th, 4 days after release


H r block reasons to buy
H&R Block: Reasons to Buy

  • Largest provider of tax preparation services in the world

  • Low in their yearly cycle

    • Just beginning to gain

  • Respected, trusted brand name

    • Compared to unknown competition

  • Unstoppable business

    • All adults have to file a tax return


H r block reasons to buy1
H&R Block: Reasons to Buy

  • Even small tax changes increase business

  • Multiple markets:

    • US, Canada, Australia

  • Multiple businesses:

    • Tax services, tax software, banking, business consulting

  • Cutting down excess businesses

    • Investment advisement, subprime mortgages


H r block reasons to buy2
H&R Block: Reasons to Buy

  • Trying for new public image

    • Revamped, professional storefront

    • More serious advertising campaign

      • Multiple platforms

      • Shareholders at last meeting applauded demo ad

  • Reduced prices for low-income, young clients

  • Honor federal college credits

  • Hiring nearly 15,000 tax professionals


H r block competition
H&R Block: Competition

  • Jackson Hewitt Tax Service, Inc (JTX)

    • Market cap of only 135M

    • Less diversified, smaller client base, smaller market

    • Downgraded at Oppenheimer in August

    • Drop of 13% in tax return volume in 2009 season

  • Gilman Ciocia, Inc (GTAX)

    • Serves mostly middle and upper class

    • Only in New Jersey, New York, and Florida

  • Intuit, Inc (INC)

    • TurboTax software, but no walk-in offices


Align technology recommendation
Align Technology: Recommendation

  • Our recommendation: Watch and buy on pull back, at Limit of $15

  • Sell: Stop at $19, Limit at $22


Align technology background
Align Technology: Background

  • Designs, manufactures, markets Invisalign

    • A method for treating the misalignment of teeth

    • Alternative to visible, cumbersome braces

  • Invisalign is regulated by FDA as a Class II medical device

  • Incorporated in 1997

  • First sales of Invisalign to orthodontists in 1999

  • By late 2001, manufactured one million aligners

  • Headquarters in Santa Clara, CA


Align technology what they do
Align Technology: What They Do

  • The Invisalign system is comprised of

    • ClinCheck: creation of digital treatment plans

    • manufacturing of customized Invisalign aligners

  • Sells Invisalign directly to consumers, dentists, and/or orthodontists

  • Also sell retainers, ancillary products

    • Cleaning material, adjustment tools for Invisalign

  • Operates in North America, Europe, Asia-Pacific, Latin America, and Japan


Align technology product line up
Align Technology: Product Line-Up

  • Invisalign Full

    • Complete, personal treatment

  • Invisalign Express

    • Pre-made for various categories of treatment

  • Invisalign Teen

    • Aligner wear indicator to gauge patient compliance

  • Retention

    • Vivera retainers for Invisalign/non-Invisalign patients

  • Ancillary Products

    • Support Invisalign


Align technology current status
Align Technology: Current Status

  • To date

    • trained more than 56,700 doctors

    • manufactured more than 44 million unique Invisalign aligners

    • started more than 1,000,000 patients in treatment

    • reached $1.5 billion in cumulative net revenues

    • complied IP portfolio of more than 160 patents

    • provides exclusive education events at more than 60 universities worldwide


Align technology basic numbers
Align Technology: Basic Numbers

  • Current Price: $15.82

  • P/E Ratio: 13.61

  • Beta: 2.12

  • Dividend/ Yield: N/A

  • EPS: $1.16

  • 52-Week Low: $4.88

  • 52-Week High: $16.45

  • Market Cap: $1.05B

  • Institutional Ownership: 88%

    Taken from http://www.google.com/finance?q=algn as of 10/15/09





Algn vs nasdaq 6 months
ALGN vs NASDAQ: 6 Months


Algn vs competitors 3 months algn vs mmm xray
ALGN vs Competitors, 3 Months(ALGN vs MMM, XRAY)


Algn vs competitors 6 months algn vs mmm xray
ALGN vs Competitors, 6 Months(ALGN vs MMM, XRAY)


Align technology earnings report
Align Technology: Earnings Report

  • Q2 Earnings Report released July 232

  • EPS of $0.072

    • Compared to estimate of $0.012

  • Revenue of $76.3 million2

    • Compared to estimate of $69.4 million2

    • 27% increase in international revenue2

  • Share price rose 14% after release2

  • Predicted Q3 earnings in current range2



Align technology reasons to buy
Align Technology: Reasons to Buy

  • On a rally

  • Varied product lineup

  • Multiple markets

    • North America, Europe, Asia-Pacific, Latin America, and Japan

  • Over a million existing clients

    • And growing


Align technology reasons to buy1
Align Technology: Reasons to Buy

  • Upgraded to Buy at Northcoast on Oct 1

    • Increase in year-over-year case starts

  • Buy rating reaffirmed at Brean Murray

  • Recently released new features

    • Based on customer research and treatment data

    • Make Invisalign effective for more bite types


Align technology reasons to buy2
Align Technology: Reasons to Buy

  • Ended patent litigation with Danaher Corporation's Subsidiary Ormco Corporation

    • Exclusive agreement to work on combination orthodontic product

    • Should lead to an increase in sales

  • Beat estimates in last 6 earnings reports

    • Will probably beat again on October 22nd


Algn competition
ALGN: Competition

  • 3M Company (MMM)

    • Diversified technology company

    • No specific product that competes with Invisalign

      • Nothing invisible

  • DENTSPLY International, Inc (XRAY)

    • A few competitive products

      • Not as extensive a lineup

    • No marketing

      • Not as well-known


Citations
Citations

ALGN:

  • http://www.reuters.com/finance/stocks/companyProfile?rpc=66&symbol=ALGN.O

  • http://www.reuters.com/article/rbssHealthcareNews/idUSBNG53802820090723

  • http://www.orthodonticproductsonline.com/news/2009-09-24_01.asp

  • http://www.marketintelligencecenter.com/articles/962561

  • http://online.wsj.com/article/BT-CO-20091001-709097.html

  • http://www.reuters.com/finance/stocks/keyDevelopments?rpc=66&symbol=ALGN.O&timestamp=20090817121900

  • http://finance.aol.com/earnings/align-technology-inc/algn/nas/earnings-release

  • http://finapps.forbes.com/finapps/jsp/finance/compinfo/Earnings.jsp?tkr=ALGN

  • http://finance.aol.com/charts/align-technology-inc/algn/nas/classic-charts

  • http://www.thestreet.com/quote/ALGN/details/earnings-estimates.html

  • http://www.aligntech.com/Pages/About.aspx

  • http://www.google.com/finance?q=algn

    HRB:

  • http://www.hrblock.com/company/index.html

  • http://www.google.com/finance?q=hrb

  • http://www.reuters.com/finance/stocks/companyProfile?symbol=HRB.N&rpc=66

  • http://finance.aol.com/charts/block-h-and-r-inc/hrb/nys/classic-charts

  • http://finance.aol.com/charts/align-technology-inc/algn/nas/classic-charts

  • http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=BCOM&date=20090904&id=10365317

  • http://newstribune.com/articles/2009/09/04/business/118biz51blockpr09.txt

  • http://finance.aol.com/earnings/block-h-and-r-inc/hrb/nys/earnings-release

  • http://industry.bnet.com/financial-services/10003127/ceo-smyth-promises-peace-of-mind-at-hr-block-with-customer-centric-focus/

  • http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=AP&date=20090908&id=10371672

  • http://www.herald-dispatch.com/news/x883085341/Tax-credit-available-for-college-costs

  • http://www.mlive.com/news/saginaw/index.ssf/2009/09/hr_block_hiring_15000_tax_prep.html

  • http://www.huliq.com/1/87094/manager-keep-comcast-h-r-block-and-hasbro-radar

  • http://www.seattlepi.com/business/1310ap_us_hr_block_meeting.html

  • http://www.google.com/finance?q=OTC:GTAX

  • http://www.google.com/finance?q=NASDAQ:INTU

  • http://www.google.com/finance?q=NYSE:JTX

  • http://www.reuters.com/finance/stocks/companyProfile?symbol=JTX.N&rpc=66

  • http://www.iii.co.uk/news/?type=afxnews&articleid=7496335&action=article

  • http://caps.fool.com/Blogs/ViewPost.aspx?bpid=223597&t=01003070853754792343


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