H&R Block (HRB:NYS) Fundamental Valuation Report

Fundamental Valuation Report

H&R Block(HRB:NYS)

Consumer Cyclical:Personal Services

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$14.71 (USD) 09/10/2020

Weighted Valuation
$17.95 (USD)

Overall Rating
Undervalued by 22.0%

Valuation Models Comparables: $17.95 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Overvalued on an Asset Valuation
According to Analyst consensus at $20.50 this stock is Undervalued

Company Overview (HRB:NYS USD)

Price 14.71
Range 14.61 – 15.20
52 week 11.94 – 25.18
Open 15.08
Vol / Avg. 4.2M/2.98M
Mkt cap 2.84B
P/E 11.96
Div/yield 1.04/0.07
EPS -0.04
Shares 192.9M
Beta 0.80

Company Description

H&R Block Inc provides income tax return preparation services, digital do-it-yourself tax solutions, and other services related to income tax preparation to the general public primarily in the United States, Canada, and Australia. The company mainly prepares tax returns for customers within the United States through its company-owned offices, franchise locations, and online tax software. The vast majority of H&R Block’s offices are located in the U.S. The company derives most of its total revenue from the U.S. assisted tax preparation fees. Revenue from franchise and product royalties and digital do-it-yourself tax solutions is also relatively significant.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for HRB:NYS

Using a discounted cash flow model we generated an intrinsic value of $50.32 (USD) for HRB:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

HRB:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $50.32 1% 5% 1% 5%
WACC (or Ke) 6.24 $64.66 $40.73
Terminal Growth Rate 1.20 $41.50 $63.50
Tax Rate 0.27 $55.39 $45.25
Cash Flow 1,018,415,460 $46.62 $54.02
Capital Expenditures 0 $50.32 $50.32
Long Term Debt 1,492,654,000 $50.71 $49.93

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $18.45 (USD) for HRB:NYS. We also generated a valuation of $17.95 (USD) using other metrics and comparables.
The comparable companies were Frontdoor (FTDR:NAS), WW International (WW:NAS), Franchise Group (FRG:NAS), Medifast (MED:NYS) and ServiceMaster Global (SERV:NYS).

Company HRB:NYS End Date Value
Earnings/Share $1.17 (USD)
Book Value/Share $0.70 (USD)
Sales/Share $15.76 (USD)
Cash Flow/Share $2.92 (USD)
EBITDA/Share $1.34 (USD)
Price Based on Comps Adjustment Factor (%)
$51.05 (USD) -54.5
$5.61 (USD) 20.7
$35.19 (USD) -10.9
$30.88 (USD) -41.7
$22.27 (USD) -46.6
11.96 PE Ratio 43.63 24.68 17.43 76.85 28.03 71.18
20.98 PB Ratio 8.00 0.00 0.00 3.60 18.08 2.34
0.93 PS Ratio 2.23 2.45 1.04 2.37 2.81 2.49
5.04 PCF Ratio 17.58 17.36 9.82 24.30 17.62 18.79
7.01 EV to EBITDA 45.28 14.07 10.55 159.80 20.72 21.26


Using a multiples approach we generated a valuation of  $19.57 (USD) for HRB:NYS

Company HRB:NYS End Date Value
Earnings/Share $1.17 (USD)
Book Value/Share $0.70 (USD)
Sales/Share $15.76 (USD)
Cash Flow/Share $2.92 (USD)
EBITDA/Share $1.34 (USD)
Price Based on Comps Adjustment Factor
$16.91 (USD) 0
$13.31 (USD) 0
$28.01 (USD) 0
$28.98 (USD) 0
$10.64 (USD) 0
Ratios Ratio Average
PE Ratio 14.46
PB Ratio 18.97
PS Ratio 1.78
PCF Ratio 9.93
EV to EBITDA 7.95

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  HRB:NYS for the last 10 years was  10.56

We ran the Adjusted Book Value for  HRB:NYS and generated a book value of  $0.70 (USD)
By multiplying these we get an adjusted valuation of  $7.42 (USD)

Analyst Data

In the Stockcalc database there are 2 analysts that provide a valuation for HRB:NYS. The 2 analysts have a concensus valuation for HRB:NYS for 2021 of $20.50 (USD).


Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
2 1 0 4.3333 Outperform 2020-9-9

Current Price: 14.71 USD

Analyst Consensus
USD Millions 2021 2022
Mean EPS 3.10 2.59
# EPS Analysts 3 2
Mean Revenue 3,564.00 3,160.00
# Revenue Analysts 2 2
Mean Target Price 20.50
Mean Cash Flow
Mean Net Income 689.50 492.10
Mean Debt Outstanding
Mean Tax Rate 25.75 24.75
Mean Growth Rate 10.00
Mean Capital Expenditure

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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