H&R Block, Inc. (HRB)’s Taxing Future

My guess: H&R Block, Inc. (NYSE:HRB)’s online software. The company’s product is priced nearly identical to Turbo Tax’s, and for the most part offers an identical experience, if slightly less polished. The company advertises that in the case of an audit, an H&R Block, Inc. (NYSE:HRB) professional will hold your hand during the event. However, I imagine many would seek third-party assistance if truly in hot water with the IRS.

Bottom line
H&R Block, Inc. (NYSE:HRB) was wise to jump on the online filing train, and management has proved itself capable of adapting the size of the company to address trends toward online filing. But there are two pure players in the space that offer two different products — one premium, one entry-level — and leave little room for H&R Block At Home to grow.

On top of that, the company trades at more than 15 times forward earnings and has an EV/EBITDA of 13.76 times. Investors are paying up for this company to continue growing substantially, even in the face of the aforementioned headwinds.

While I wouldn’t recommend shorting at this time, H&R Block is by no means on my buy list.

The article H&R Block’s Taxing Future originally appeared on Fool.com and is written by Michael Lewis.

Fool contributor Michael Lewis has no position in any stocks mentioned. The Motley Fool recommends Intuit. The Motley Fool owns shares of Intuit.

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