TaxCut Improves Its Market Share

Article Excerpt

H&R BLOCK INC. $22 (New York symbol HRB; Conservative Growth Portfolio, Finance sector; Shares outstanding: 338.9 million; Market cap: $7.5 billion; Price-to-sales ratio: 5.2; WSSF Rating: Above Average) generates most of its earnings by preparing income tax returns for its clients. It also sells its “TaxCut” tax-preparation software, which lets individuals prepare and electronically file their own returns with the IRS. In December 2008, TaxCut increased its share of the tax software market to 19% from 15% a year earlier. It appears the gain is largely due to a price increase by Intuit Inc., whose TurboTax program controls 80% of this market. Still, customers tend to stick with the same tax program each year, since new versions can easily import data from the previous year’s program. A growing customer base should help increase the long-term profitability of the TaxCut operations. H&R Block is a buy. buy…