2-Star Stocks Poised to Plunge: H&R Block?

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Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, tax prep specialist H&R Block (NYS: HRB) has received a distressing two-star ranking.

With that in mind, let's take a closer look at H&R Block's business and see what CAPS investors are saying about the stock right now.

H&R Blockfacts

Headquarters (founded)Kansas City, Mo. (1946)
Market Cap$4.4 billion
IndustrySpecialized consumer services
Trailing-12-Month Revenue$2.8 billion
ManagementCFO William Cobb (since May 2011)
CFO Gregory Macfarlane (since June 2012)
Return on Equity (average, past 3 years)28%
Cash/Debt$2.0 billion / $1.1 billion
Dividend Yield5%
CompetitorsIntuit
Jackson Hewitt Tax Service
JTH Holding

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 33% of the 558 members who have rated H&R Block believe the stock will underperform the S&P 500 going forward.

A few months ago, one of those Fools, Merlinssecret, succinctly summed up the bear case for our community:

[H&R Block] is a stagnant slow growth [brick-and-mortar] company locked in mortal combat with web based tax preparers such as [TurboTax]. ... While they have a good dividend and solid cash flow[,] management has historically proven inept at finding [profitable] ways to use this capital. I don't see this stock falling much from its current level but neither do I see it outperforming the market anytime soon.

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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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