H&R Block (HRB) vs. Intuit (INTU): Which is the Better Investment? Both H&R Block, Inc. (HRB) and Intuit Inc. (INTU) are in the tax preparation business, but which is the better stock for investors?

John Udovich for SmallCapNetwork.com writes: As April 15th approaches, you might be using the tax services of eitherH&R Block, Inc. (NYSE: HRB) and Intuit Inc. (NASDAQ: INTU) to figure out your taxes. However, which of these stocks is the better tax preparation investment for investors or are both a sure thing?

What Are H&R Block, Inc. and Intuit Inc.?

Brothers Henry W. Bloch and Richard A. Bloch founded H&R Block in 1955 and today its one of the world's largest tax services providers with more than 100,000 tax professionals and having prepared more than 550 million tax returns worldwide since its founding. In addition to providing tax return preparation services in-person, H&R Block offers online and desktop software products along with financial products to support its tax business through the H&R Block Bank.

Started in 1983 with the Quicken personal finance software, Intuit’s flagship products include QuickBooks, TurboTax and Quicken which are designed to help people manage their personal finances and run small businesses. Moreover, Intuit’s products have evolved from the desktop to the cloud with many being available both online and on mobile devices.

What’s There to Like (or Nor Like) About H&R Block and Intuit? 

Earlier this tax season, H&R Block received a dose of bad publicity after reports it improperly filed Form 8863, which is used to claim educational credits, leaving a mandatory field blank with the problem impacting about 10% or 660,000 of the 6.6 million tax returns containing the form. Initially it was thought the problem could delay refunds by as much as six weeks for impacted returns (later that figure was reduced to two to four weeks) as well as lead to lawsuits for the company to settle.

Otherwise, news of the refund problem seemed to have little impact on H&R Block because before the problem was revealed, the company gave an upbeat forecast despite an initial delay in tax season (Note: HRB does nearly 75% of its annual sales in the tax season quarter). Specifically, H&R Block’s CEO was expecting more business thanks to the expiration of the Bush era tax cuts along with the implementation of Obamacare. H&R Block is also cutting expenses to better compete Intuit plus there is an ongoing court case filed by the former against the later for alleged brand misuse and disparagement of the H&R Block tax professionals in TurboTax TV commercials.

Meanwhile and in late March, Intuit announced that from January 30 through March 16, sales of TurboTax Online units rose 29% versus the comparable prior-year period while Total TurboTax federal units were up 26% during the same period. However, Intuit has also had a snafu with the Minnesota Department of Revenue advising taxpayers not to use the company’s products to file Minnesota taxes in any form due to “multiple issues” the company is trying to fix.

Back in February, Intuit issued a forecast that current-quarter results would be ahead of Wall Street estimates thanks to higher demand in the unit offering tax services to small businesses. Intuit also earns 95% of its revenue from the United States, but the company is looking to expand globally.

Otherwise, H&R Block has a trailing P/E of 22.56 and a forward P/E of 15.06 while Intuit has a trailing P/E of 24.82 and a forward P/E of 17.18. H&R Block also has a forward dividend of $0.80 for a dividend yield of 2.80% while Intuit has a forward dividend of $0.68 for a dividend yield of 1.10%. 

Share Performance: H&R Block, Inc. vs. Intuit Inc.

On Thursday, H&R Block fell 0.66% to $28.76 (HRB has a 52 week trading range of $14.35 to $29.68 a share) for a market cap of $7.83 billion while Intuit rose 0.17% to $64.93 (INTU has a 52 week trading range of $53.38 to $68.41 a share) for a market cap of $19.24 billion. In addition, H&R Block is up 54.9% since the start of the year (despite the tax refund snafu), up 68.9% over the past year and up 37.7% over the past five years while Intuit is up 9.2% since the start of the year, up 8.6% over the past year and up 138.5% over the past five years.

Here is a quick visual comparison of the performance of both stocks:

Traders and investors who are technicians should also take a closer look at the following technical charts:

The Bottom Line. Perhaps the biggest threat for investors in H&R Block or Intuit would be some kind of tax reform that leads to simpler taxes, but let’s be realistic and conclude that the chances of taxes getting simple enough where we won’t need tax preparers or tax preparation software are remote – especially as Obamacare and all of Obama’s new taxes or regulations kick in over the next couple of years. That means either H&R Block or Intuit could be a good investment over at least the medium term.