When you look at H&R BLOCK INC (NYSE:HRB), it's hard to ignore the strong fundamentals, especially considering its likely undervaluation.

Consider H&R BLOCK INC (NYSE:HRB) as a top value stock, identified by our stock screening tool. HRB shines in terms of profitability, solvency, and liquidity, all while remaining very reasonably priced. Let's dive deeper into the analysis.

Evaluating Valuation: HRB

ChartMill assigns a proprietary Valuation Rating to each stock. The score is computed by evaluating various valuation aspects, like price to earnings and free cash flow, both absolutely as relative to the market and industry. HRB was assigned a score of 7 for valuation:

• HRB's Price/Earnings ratio is a bit cheaper when compared to the industry. HRB is cheaper than 76.39% of the companies in the same industry.
• The average S&P500 Price/Earnings ratio is at 27.63. HRB is valued slightly cheaper when compared to this.
• Based on the Price/Forward Earnings ratio of 11.45, the valuation of HRB can be described as reasonable.
• 87.50% of the companies in the same industry are more expensive than HRB, based on the Price/Forward Earnings ratio.
• Compared to an average S&P500 Price/Forward Earnings ratio of 20.85, HRB is valued a bit cheaper.
• Based on the Enterprise Value to EBITDA ratio, HRB is valued a bit cheaper than the industry average as 65.28% of the companies are valued more expensively.
• Compared to the rest of the industry, the Price/Free Cash Flow ratio of HRB indicates a rather cheap valuation: HRB is cheaper than 86.11% of the companies listed in the same industry.
• HRB's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
• HRB has an outstanding profitability rating, which may justify a higher PE ratio.

What does the Profitability looks like for HRB

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. HRB scores a 8 out of 10:

• With an excellent Return On Assets value of 19.48%, HRB belongs to the best of the industry, outperforming 95.83% of the companies in the same industry.
• HRB has a better Return On Invested Capital (36.07%) than 97.22% of its industry peers.
• HRB had an Average Return On Invested Capital over the past 3 years of 27.24%. This is significantly above the industry average of 11.60%.
• The 3 year average ROIC (27.24%) for HRB is below the current ROIC(36.07%), indicating increased profibility in the last year.
• HRB has a Profit Margin of 14.59%. This is amongst the best in the industry. HRB outperforms 90.28% of its industry peers.
• In the last couple of years the Profit Margin of HRB has grown nicely.
• HRB's Operating Margin of 20.92% is amongst the best of the industry. HRB outperforms 88.89% of its industry peers.
• HRB's Operating Margin has improved in the last couple of years.

A Closer Look at Health for HRB

A critical element of ChartMill's stock evaluation is the Health Rating, which spans from 0 to 10. This rating considers multiple health factors, including liquidity and solvency, both in absolute terms and relative to industry peers. HRB has received a 5 out of 10:

• An Altman-Z score of 3.00 indicates that HRB is not in any danger for bankruptcy at the moment.
• HRB's Altman-Z score of 3.00 is fine compared to the rest of the industry. HRB outperforms 77.78% of its industry peers.
• The Debt to FCF ratio of HRB is 3.32, which is a good value as it means it would take HRB, 3.32 years of fcf income to pay off all of its debts.
• With a decent Debt to FCF ratio value of 3.32, HRB is doing good in the industry, outperforming 75.00% of the companies in the same industry.

Looking at the Growth

ChartMill employs its own Growth Rating system for all stocks. This score, ranging from 0 to 10, is derived by evaluating different growth factors, such as EPS and revenue growth, taking into account both past performance and future projections. HRB has earned a 4 for growth:

• HRB shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 15.54% yearly.
• The Earnings Per Share is expected to grow by 9.17% on average over the next years. This is quite good.

Our Decent Value screener lists more Decent Value stocks and is updated daily.

Our latest full fundamental report of HRB contains the most current fundamental analsysis.

Disclaimer

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.