Should Value Investors Buy H&R Block (HRB) Stock?
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is H&R Block (HRB). HRB is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 10.12, which compares to its industry's average of 10.93. Over the last 12 months, HRB's Forward P/E has been as high as 10.57 and as low as 7.25, with a median of 8.67.
Investors will also notice that HRB has a PEG ratio of 0.81. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. HRB's industry has an average PEG of 0.87 right now. Over the last 12 months, HRB's PEG has been as high as 0.85 and as low as 0.58, with a median of 0.69.
Finally, investors will want to recognize that HRB has a P/CF ratio of 8.44. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. HRB's P/CF compares to its industry's average P/CF of 13.25. HRB's P/CF has been as high as 8.55 and as low as 3.22, with a median of 4.17, all within the past year.
SP Plus (SP) may be another strong Consumer Services - Miscellaneous stock to add to your shortlist. SP is a # 2 (Buy) stock with a Value grade of A.
SP Plus sports a P/B ratio of 3.07 as well; this compares to its industry's price-to-book ratio of 5.72. In the past 52 weeks, SP's P/B has been as high as 4.03, as low as 2.77, with a median of 3.15.
These figures are just a handful of the metrics value investors tend to look at, but they help show that H&R Block and SP Plus are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, HRB and SP feels like a great value stock at the moment.
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H&R Block, Inc. (HRB) : Free Stock Analysis Report
SP Plus Corporation (SP) : Free Stock Analysis Report
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