Financial Analysis: H&R Block (NYSE:HRB) vs. Youdao (NYSE:DAO)

Youdao (NYSE:DAO) and H&R Block (NYSE:HRB) are both mid-cap consumer discretionary companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, analyst recommendations, risk, profitability, institutional ownership, valuation and earnings.

Profitability

This table compares Youdao and H&R Block’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Youdao	2.71%	-8.46%	8.78%
H&R Block	18.59%	-214.84%	22.56%

Analyst Ratings

This is a summary of recent ratings for Youdao and H&R Block, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Youdao	0	1	1	0	2.50
H&R Block	1	2	1	1	2.40

Youdao currently has a consensus target price of $22.00, indicating a potential upside of 14.44%. H&R Block has a consensus target price of $46.67, indicating a potential downside of 2.80%. Given Youdao’s stronger consensus rating and higher probable upside, research analysts plainly believe Youdao is more favorable than H&R Block.

Valuation and Earnings

This table compares Youdao and H&R Block”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Youdao	$822.04 million	2.82	$15.35 million	$0.20	96.12
H&R Block	$3.95 billion	1.49	$733.60 million	$5.72	8.39

H&R Block has higher revenue and earnings than Youdao. H&R Block is trading at a lower price-to-earnings ratio than Youdao, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

21.9% of Youdao shares are held by institutional investors. Comparatively, 90.1% of H&R Block shares are held by institutional investors. 43.0% of Youdao shares are held by company insiders. Comparatively, 0.7% of H&R Block shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

Youdao has a beta of 0.52, meaning that its stock price is 48% less volatile than the S&P 500. Comparatively, H&R Block has a beta of 0.38, meaning that its stock price is 62% less volatile than the S&P 500.

About Youdao

Youdao, Inc., an internet technology company, provides online services in the field of content, community, communication, and commerce in China. It operates through three segments: Learning Services, Smart Devices, and Online Marketing Services. The company provides various learning content, applications, and solutions, which cover topics and target people from various age groups for their learning needs through its websites and mobile applications. It offers online knowledge tools, which include Youdao and other dictionaries and translation tools; learning services consisting of tutoring, fee-based premium, and other services; STEAM courses, adult and vocational courses, and other courses, such as China University MOOC; smart devices, such as Youdao Dictionary Pen, Youdao Listening Pod, Youdao Smart light, Youdao Pocket Translator, and Youdao Super Dictionary; education digitalization solutions comprising technologies and solutions licensed to schools or enterprise customers, such as Youdao Smart Learning Terminal, Youdao Sports, and Youdao Smart Cloud; and online marketing services. In addition, the company provides online courses comprising Youdao Premium Courses and NetEase Cloud Classroom, as well as technical support to the variable interest entities (VIEs). Youdao, Inc. was founded in 2006 and is headquartered in Hangzhou, China. Youdao, Inc. is a subsidiary of NetEase, Inc.

About H&R Block

H&R Block, Inc. engages in the provision of tax return preparation solutions, financial products and small business solutions. The company was founded by Henry W. Bloch and Richard A. Bloch on January 25, 1955, and is headquartered in Kansas City, MO.