sundeep kutumbaka and george bocchetti
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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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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

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

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×tamp=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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