By Rob Otman
H&R Block (NYSE: HRB) is a midcap company that operates within the diversified consumer services industry. Its market cap is $6 billion today, and the total one-year return is 26.36% for shareholders.
H&R Block stock is beating the market, and it reports earnings tonight. But does that make it a good buy today? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: H&R Block reported a recent EPS growth rate of -44.12%. That’s below the diversified consumer services industry average of 23.42%. That’s not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the diversified consumer services industry is 32.38. And H&R Block’s ratio comes in at 17.97. It’s trading at a better value than many of its competitors.
✗ Debt-to-Equity: The debt-to-equity ratio for H&R Block stock is 324%. That’s above the diversified consumer services industry average of 68.05%. That’s not a good sign. H&R Block’s debt levels should be lower.
✗ Free Cash Flow per Share Growth: H&R Block’s FCF has been lower than that of its competitors over the last year. That’s not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
✗ Profit Margins: The profit margin of H&R Block comes in at -23.13% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. H&R Block’s profit margin is below the diversified consumer services average of 10.96%. So that’s a negative indicator for investors.
✗ Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for H&R Block is below 0%, and that’s below its industry average ROE of 14.48%.
H&R Block stock passes one of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Sell.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth. For more details, click here. …read more
Source:: Investment You
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