Does the H&R Block Cloud Have a Silver Lining?

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Does the H&R Block Cloud Have a Silver Lining?

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H&R Block (ticker: HRB) has fallen on hard times. Customers are due some $62.5 million dollars after settling a class action law suit against the largest tax preparer in the U.S. It seems that Block was accused of violating consumer protection laws. The company offered fast money, called “Rapid Refunds,” to customers expecting tax refunds. However, they were actually loans repaid by those refunds that charged interest rates of between 29 percent and 750 percent. Not only that, the company recently revised its second quarter financial results to include bigger than previously reported losses related to Hurricanes Katrina and Rita. So, for H&R Block, if it wasn’t for bad news there would be no news at all. But what looks bad on the surface can spell opportunity for investors. The truth of the matter is that H&R Block is a very good business that investors can purchase at a bargain price. We know it’s a good business because it’s earning a high rate of return on its own money. In what I t