Earnings Cheat Sheet: Jackson Hewitt Shares Rebound 28% on Narrowed Loss

Parsippany-NJ based Jackson Hewitt (NYSE:JTX) is a tax preparation service provider with over 5,000 franchise offices and over 900 company-owned offices. Shares of Jackson Hewitt have been struggling in 2010, recently under the $1 mark. After a steady annual decline, Jackson Hewitt stock received a big boost from investors on Wall Street today. Here’s the earnings breakdown:

Earnings: Issued a loss of $.67 per share, or $19.4 million, compared to a loss of $.68 per share, or $19.5 million, in the same period a year ago.

Revenue: Dropped 14% to $3.48 billion, compared to $4.03 billion in the prior year.

Actual versus Wall Street Expectations: The earnings loss of $.67 cents per share beat expectations by $.07 cents.  The consensus analyst earnings expectation was.74 $ cents per share (Thomson Reuters).

Notable Stats: Jackson Hewitt has historically generated approximately 4% of its total annual revenues in each of the first two fiscal quarters due to the seasonal nature of the tax return preparation business.

Jackson Hewitt typically incurs a net loss during the first and second fiscal quarters.

JTX has beaten earnings estimates for the third straight quarter in a row.

Did You Hear That? Harry W. Buckley, President and CEO of Jackson Hewitt, said, “”We successfully expanded our refund anticipation loan (‘RAL’) product coverage versus last year to approximately 80% of anticipated volume…We continue to successfully work with Walmart to implement operational improvements designed to drive more clients to our kiosks under our exclusive national arrangement.”

Commentary: Shares of JTX have had a rough year of decline. Earlier this year, shares reached as high as $5 per share. Prior to today’s earnings report, JTX shares have been treading water as a penny stock. Following today’s report, shares received a big boost to the upside of more than 27%. Based on the chart below, JTX rose above the 50-day moving average on today’s pop, yet remain below the 200-day moving average. The company continues to remain in the shadow of H&R Block (NYSE:HRB) and Intuit (NASDAQ:INTU) when it comes to proving leadership in the tax preparation business. With earnings improving over the past 3 quarters, look for further momentum and better revenue growth before confidently entering JTX shares.

Disclosure: No position in JTX.

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