Things were so much better at this time last year, when we were joking that the H&R in H&R Block (NYSE:HRB) stood for Home & Refinancing. The company had posted a profit, a seasonal eye-opener given that the company had historically lost money until tax season rolled around -- and it earned it in earnest. The reason? Well, more than 60% of the company's revenue was coming from its mortgage business.

Now the company finds itself in familiar territory for its latest fiscal second quarter. It's in the red for the period, losing $0.52 a share as revenues fell by 5% to hit $539 million. While charges for new business initiatives and an asset writedown hurt the bottom line, the biggest culprit was the 42% slide in pre-tax operating profits for its mortgage services operations.

The poor showing hurts because, despite rising rates, folks are still out there buying homes and taking advantage of what are still low financing rates. In fact, even H&R Block grew its mortgage loan production by 2.7% during the quarter. It just got roughed up on the way to the bottom line.

That cool showing finds the company now looking to earn between $3.50 and $4.00 a share this fiscal year. Yet if you whip out a calculator, it may seem as though picking up shares of H&R Block at 12-13 times this year's depressed earnings would be a bargain. The company may agree with you on that because it has been busy buying back shares.

That is also why it's comforting to see the company's tax services business revenue climb by 12% during the seasonal lull. As the market leader, well ahead of rival Jackson Hewitt (NYSE:JTX) in traditional mail-in tax return services and always looking to compete against software leader Intuit (NASDAQ:INTU) on the computerized return front, H&R Block remains a quality company.

Really. It just needs to tidy up its home business. After all, can't you just smell April 15 around the long corner? That's when the guests truly start to arrive.

Has our Tax Center motivated you into making sure you are making all the right tax moves before 2004 ends? Do you rely on a tax pro like H&R Block to help you file your personal return or do you go it alone? All this and more -- in the Tax Strategies discussion board. Only on

Longtime Fool contributor Rick Munarriz is a happy filer with Block's TaxCut program. However, he does not own shares in any company mentioned in this story. He is a member of the Rule Breakers analytical team, seeking out tomorrow's great growth stocks today.