H&R BLOCK INC (HRB) Stock Analysis
H&R BLOCK INC (HRB) Stock Analysis
Overall Grade: F (Concerning)
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H&R BLOCK INC faces challenges in financial performance that warrant careful analysis.
Key Metrics:
| Metric | Value | Context |
|---|---|---|
| ROIC | 86.8% | Above industry average |
| FCF Margin | 13.8% | Healthy cash flow |
| Debt/Equity | -3.0x | Conservative leverage |
Investment Thesis: Strong return on invested capital of 86.8% suggests durable competitive advantages and efficient capital allocation.
What is H&R BLOCK INC's Profitability and ROIC?
H&R BLOCK INC generates strong returns on invested capital at 86.8%, indicating efficient capital allocation and competitive advantages. Gross margin of 49.9% with operating margin at 22.3% reflects the company's strong market position.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 86.8% | Excellent | Strong capital efficiency |
| Return on Equity (ROE) | -162.7% | Red flag | Moderate equity returns |
| Gross Margin | 49.9% | Good | Strong pricing power |
| Operating Margin | 22.3% | Excellent | Efficient operations |
How Strong is H&R BLOCK INC's Cash Flow Quality?
H&R BLOCK INC generated $524.1M in free cash flow over the trailing twelve months, representing a 13.8% margin. FCF was positive in N/A of the last 8 quarters, indicating variable cash generation.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Free Cash Flow Margin | 13.8% | Good | Healthy cash generation |
| Free Cash Flow (TTM) | $524.1M | Good | Positive cash generation |
| OCF/Net Income | 1.0x | Good | Potential accrual concerns |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
What is H&R BLOCK INC's Financial Health?
H&R BLOCK INC's debt-to-equity ratio of -3.0x indicates conservative leverage.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Debt to Equity | -3.0x | Excellent | Conservative capital structure |
| Net Cash Position | $-2.1B | Warning | Net debt position |
Is H&R BLOCK INC Stock Overvalued or Undervalued?
H&R BLOCK INC trades at a P/E of 9.9x, representing a premium to the sector median of N/A. Free cash flow yield of 9.2% offers attractive cash returns.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| P/E Ratio | 9.9x | Adequate | Reasonable valuation |
| EV/Sales | 2.5x | Good | Attractive revenue multiple |
| FCF Yield | 9.2% | Excellent | Attractive cash return |
| Dividend Yield | 3.8% | Adequate | Meaningful income |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 86.8% | Top 5% | 13.4x above |
| Free Cash Flow Margin | 13.8% | Top 50% | 1.4x above |
| Gross Margin | 49.9% | Bottom 50% | 0.9x below |
| Operating Margin | 22.3% | Top 25% | 3.5x above |
| Return on Equity (ROE) | -162.7% | Top 5% | -26.1x below |
| P/E Ratio | 9.9x | N/A | - |
Rating Thresholds
Return on Invested Capital (ROIC)
Measures how efficiently a company uses its debt and equity capital to generate profits. ROIC above 15% typically indicates a competitive moat.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Exceptional capital efficiency, strong competitive moat |
| Good | 12% - 20% | Above-average returns, sustainable competitive position |
| Adequate | 8% - 12% | Around cost of capital, moderate competitive position |
| Warning | 4% - 8% | Below cost of capital, value may be eroding |
| Red flag | < 4% | Significant capital destruction, fundamental issues |
Current: 86.8% (Excellent - Top 5% of sector (median: 6.5%))
Free Cash Flow Margin
The percentage of revenue converted to free cash flow. Higher margins indicate stronger cash generation and business quality.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Strong cash generation, high-quality business |
| Good | 10% - 20% | Healthy cash conversion |
| Adequate | 5% - 10% | Moderate cash generation |
| Warning | 0% - 5% | Thin cash margins, capital intensive |
| Red flag | < 0% | Cash burn, potential liquidity concerns |
Current: 13.8% (Good - Top 50% of sector (median: 10.0%))
Gross Margin
Revenue minus cost of goods sold as a percentage. Higher gross margins indicate pricing power and competitive advantage.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 50% | Strong pricing power and competitive moat |
| Good | 30% - 50% | Healthy margins, differentiated product |
| Adequate | 20% - 30% | Moderate margins, competitive industry |
| Warning | 10% - 20% | Thin margins, commodity-like business |
| Red flag | < 10% | Very thin margins, structural challenges |
Current: 49.9% (Good - Bottom 50% of sector (median: 52.9%))
Debt to Equity Ratio
Total debt divided by shareholders' equity. Lower ratios indicate more conservative financing and reduced financial risk.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 0.3x | Conservative leverage, strong balance sheet |
| Good | 0.3x - 0.7x | Moderate leverage, healthy financial position |
| Adequate | 0.7x - 1.5x | Elevated leverage, monitor closely |
| Warning | 1.5x - 3.0x | High leverage, increased financial risk |
| Red flag | > 3.0x | Excessive leverage, potential distress risk |
Current: -295.9% (Excellent)
P/E Ratio (Price-to-Earnings)
Stock price divided by earnings per share. Lower P/E may indicate undervaluation, while higher P/E suggests growth expectations.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 15x | Attractively valued, potential opportunity |
| Good | 15x - 25x | Fair value for quality company |
| Adequate | 25x - 35x | Growth premium, justify with earnings growth |
| Warning | 35x - 50x | High expectations priced in |
| Red flag | > 50x or negative | Speculative valuation or losses |
Current: 990.5% (Adequate)
Free Cash Flow Yield
Free cash flow per share divided by stock price. Higher FCF yield indicates better cash return relative to valuation.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 8% | High cash return, potential value opportunity |
| Good | 5% - 8% | Solid cash yield |
| Adequate | 3% - 5% | Moderate cash return |
| Warning | 1% - 3% | Low cash yield, growth expectations |
| Red flag | < 1% | Minimal cash return to shareholders |
Current: 9.2% (Excellent)
Frequently Asked Questions
Q: What is H&R BLOCK INC's Return on Invested Capital (ROIC)?
H&R BLOCK INC (HRB) has a trailing twelve-month Return on Invested Capital (ROIC) of 86.8%. This compares above the sector median of 6.5%. An ROIC above 20% indicates exceptional capital efficiency and strong competitive advantages.
Q: What is H&R BLOCK INC's Free Cash Flow Margin?
H&R BLOCK INC (HRB) has a free cash flow margin of 13.8%, generating $524.1 million in free cash flow over the trailing twelve months. A FCF margin between 10-20% represents healthy cash generation for most industries.
Q: Is H&R BLOCK INC stock overvalued or undervalued?
H&R BLOCK INC (HRB) trades at a P/E ratio of 9.9x, which is above the sector median of N/A. The EV/Sales multiple is 2.5x. Free cash flow yield is 9.2%, which represents an attractive cash return to investors.
Q: Does H&R BLOCK INC pay a dividend?
H&R BLOCK INC (HRB) currently pays a dividend yield of 3.8%. Including share buybacks, the total shareholder yield is 3.8%. This yield is moderate, suggesting a balance between income and growth reinvestment.
Q: What is H&R BLOCK INC's revenue and earnings growth?
H&R BLOCK INC (HRB) grew revenue by 4.7% year-over-year. Earnings per share increased by 21.3% compared to the prior year. Modest growth indicates a mature business with stable demand.
Q: How does H&R BLOCK INC compare to competitors in Technology?
Compared to other companies in Technology, H&R BLOCK INC (HRB) shows: ROIC of 86.8% is above the sector median of 6.5% (Top 0%). FCF margin of 13.8% exceeds the sector median of 10.0% (Top 42% of sector). Gross margin at 49.9% is 3 percentage points lower than sector peers. These rankings are based on MetricDuck's analysis of all Technology companies with available SEC filings.
Q: What warning signs should I watch for with H&R BLOCK INC?
Investors in H&R BLOCK INC (HRB) should monitor these potential warning signs: 1) ROIC has been declining, potentially signaling deteriorating competitive position. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-11-06. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
This analysis is for informational purposes only and does not constitute investment advice.