Before the Call: Blocking and Talking From H&R

Though H&R Block (NYSE:HRB) is one of the leaders in the world of tax preparation, taxes have taken a backseat recently as the stock has been kicked around by the market. The company has grabbed time in the spotlight because of the troubles with its Option One mortgage arm, which was involved in subprime lending (which is now a four-letter word, in case you didn't know). Option One has since been passed off to Cerberus Capital Management, which will hopefully allow H&R Block to put its focus back on its core competency.

After the earnings are released, we'll have plenty of data to dig into. But before that happens, let's step back and take a look at what investors think about H&R Block as a long-term investment. To gain this insight, I've tapped into Motley Fool CAPS, where more than 30,000 investors have joined together to offer their thoughts on more than 4,600 companies, H&R Block among them. Here's what Fools have to say about the company.

Up or down?
In CAPS, 159 investors have weighed in on H&R Block, and the community has given it the ol' squadoosh.

Out of a possible five stars, H&R Block has managed to get just one. Just slightly more than 50% of players who have rated the company have been bullish on it. When it comes to the CAPS All-Stars -- those investors in the top 20% of all CAPS players -- the stock has gotten support from a measly 33%.

Among comparable stocks in tax prep and other specialty services, H&R Block finds itself at the bottom of the barrel.

Wall Street vs. Main Street
It appears that the love for H&R that's missing on CAPS may have shown up on Wall Street to some extent. Though half of the eight analysts following the stock have rated it a hold, the other half think that investors should be thinking about buying.

The stock itself has bounced up from its lows for the year, but is still down just more than 1% for the last 12 months, while the S&P has raced ahead 21%. On a longer time frame, the stock has hit $30 a couple of times in the past five years, but in 2002 it was trading in just about the same price range that it is now.

Bull pitch
CAPS All-Star rwadington is one of the brave H&R bulls. He says:

[H&R Block] does not get the respect it deserves. The company has turned the corner and will outperform the market this year. It is off to a great 2007 campaign. This stock should hit $30 this year.

Bear pitch
One of the many vocal bears, DLai0001, counters that H&R's tax prep business is going to continue to come under fire:

Intuit is sure taking it to them this tax season. As a former customer, I definitely can say that their tax professionals don't add any real value over what the online tax software provides. It's just a guy who enters in information on all your forms, which you can do yourself. No real consultation on tax planning or financial insights.

They have made their own tax software to undercut TurboTax. However, I think in the long run their margins will be squeezed and they won't really see much out of it.

Who said that?
To read more from the wise Fools who penned these words, and explore the wealth of additional financial data we've put together on the company, just click here.

Coinstar is a Motley Fool Hidden Gems recommendation, and Jackson Hewitt Tax Service is a Motley Fool Pay Dirt selection.

Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. The Fool's disclosure policy had a page on MySpace, but became way too popular and ended up spending all of its time updating its photos.