H&R Block (HRB): Valuation Update Following Strong Earnings, Dividend Hike, and Leadership Changes

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If you are watching H&R Block (HRB) right now, you are not alone. The company just wrapped up a fourth quarter that saw both revenue and net income move higher compared to last year, marking its eighth straight year of increasing the dividend. At the same time, H&R Block is making changes in its leadership. The CEO has announced his retirement, and a successor with a solid track record in the industry will take over at the start of next year. These headlines can capture the attention of investors considering whether to buy, hold, or move on.

Despite those positive signals, HRB’s performance in the market has not matched its operational gains over the past year. Shares have dipped 16% over twelve months, and momentum has softened in recent months. This trend follows years of steady share buybacks, rising dividends, and consistent, though unspectacular, profit growth. The executive changes and stable earnings might shift the narrative, but the stock has been trending gently downward from recent highs.

With executive transitions, new dividend growth, and improved financials in focus, the key question is whether H&R Block is undervalued at current levels or if the market is already pricing in its future growth.

Most Popular Narrative: 5.2% Undervalued

According to community narrative, H&R Block is viewed as modestly undervalued, with its current price falling below the consensus estimate of fair value based on future growth assumptions and risk factors.

*"H&R Block's continued expansion and innovation in digital tax solutions (DIY), including improvements in AI-powered features and successful cross-platform offerings (MyBlock app, Tax Pro Review), support higher client conversion rates among new users and premium SKUs. These developments should contribute meaningfully to both revenue growth and margin expansion."*

Is H&R Block quietly building a digital powerhouse behind those familiar green storefronts? The most popular narrative points to a transformation through technology and looks to a future earnings mix that may be richer than many anticipate. Which key financial levers set this valuation apart from others? The answer may surprise you. Take a closer look at the analyst playbook to see what makes this fair value projection noteworthy.

Result: Fair Value of $55 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent market share losses and competition from digital-first rivals could challenge H&R Block’s growth outlook. These factors may also put pressure on future profit margins.

Find out about the key risks to this H&R Block narrative.

Another View: SWS DCF Model

Looking at things from a different angle, the SWS DCF model also points to H&R Block as undervalued. This approach focuses on cash flow rather than market comparisons and offers a fresh perspective on where value lies. Could continued operational strength turn this discount into future market gains?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out H&R Block for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own H&R Block Narrative

If you want to take a different view or dive deeper into the latest financial data, you can build your own H&R Block thesis in just a few minutes, and do it your way.

A great starting point for your H&R Block research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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