Q
Please give me your opinion of stock in H&R Block Inc.
J.H., via the Internet
A
While nothing is certain except death and taxes, the latter is changing.
Though it still holds 16 percent of a fragmented market, the largest U.S. tax preparer had a disappointing tax season. The total retail returns prepared fell from a year earlier and so did fees.
Taxpayers switching to do-it-yourself software and online tax preparation such as Intuit Inc.’s Turbo Tax is one reason for Block’s ongoing market decline.
And new rivals in its traditional business such as Liberty Tax, as well as aggressive longtime competitors such as Jackson Hewitt Tax Services, are pressuring its fee structure.
Shares of H&R Block (HRB) recently were down 23 percent this year after last year’s 0.4 percent drop. Block, which has done considerable cost cutting, saw profit rise 6.9 percent in its most recent quarter, though it handled fewer returns.
Besides 12,000 tax offices nationwide, it also offers preparation through H&R Block Online and H&R Block at Home software. It provides retail banking services through H&R Block Bank and business consulting through its RSM McGladrey division. It exited its money-losing Option One Mortgage Corp. and H&R Block Financial Advisors units to emphasize its tax-preparation roots.
Consensus Wall Street analyst recommendation on Block shares is “hold,” according to Thomson Reuters, consisting of two “strong buys,” five “holds” and one “underperform.”
Earnings are expected to decline 11 percent this year compared with a 15 percent increase expected for the personal services industry.
Q
Is Vanguard Mid Cap Growth Fund a worthy place to put my retirement money?
P.K., via the Internet
A
While this growth-oriented fund is managed by two advisory firms, both favor companies with strong balance sheets and a commitment to enhancing shareholder value.
The only differences are that the team from Chartwell Investment Partners tends to have more stock turnover than that from William Blair & Co., which tends to be more price-conscious.
The $1.4 billion Vanguard Mid Cap Growth Fund (VMGRX) recently had a 12-month annualized return of 32 percent to rank in the lower quarter of mid-cap growth funds. Its three-year annualized decline of 3 percent places it in the upper half of its peers.
“Multimanaged funds often run the risk of looking just like the market, but I don’t think you’re in jeopardy of that here because when one is zigging, the other will be zagging,” said Dan Culloton, analyst with Morningstar Inc. “This is not a core fund for an individual’s portfolio, but a mid-cap growth portfolio that can complement other funds that are leaning too much to large or small stocks.”
The two investment firms have managed Vanguard Mid Cap Growth Fund since 2006. Both are research-oriented and favor rapidly-growing midsize firms, so the fund is likely to lag in more speculative market periods, said Culloton.
More Top Picks Best Cast Iron Wood Stoves
Consumer services represent the largest concentration, at 18 percent, with additional concentrations in hardware, financial services and business services.
This “no-load” (no sales charge) fund requires a $10,000 minimum initial investment and has a low annual expense ratio of 0.58 percent.
Q
How long does bankruptcy stay on your record, and does it show up only on your credit report?
M.L., via the Internet
A
Chapter 7 bankruptcy, the full discharge of your debt, is reported for 10 years from your filing date. Chapter 13, a court-ordered reorganization in which you pay back part of your debt, is reported for seven years from your filing date.
“If someone is trying save a home or preserve equity, they would typically be sent over to file Chapter 13, a court procedure,” said Catherine Williams, vice president for financial literacy of Money Management International.
Because it is a public document, a bankruptcy filing will show up in a public records search.
Andrew Leckey answers questions only through the column. E-mail him at
.