Jackson Hewitt Jumps on Wal-Mart and Earnings

On back to back days the two largest tax preparation services released prior quarter earnings. H&R Block Inc (HRB) reported on Tuesday disappointing investors who sent the stock tumbling from $20.48 a share to $19.90 a share on the day. Today saw the opposite reaction for Jackson Hewitt (JTX) which saw their shares bounce higher 17% on a better than expected loss. These companies are both cyclical and usually post profits during the first 2 quarters of a calendar year only.

H&R Block Inc.

The H&R Block loss was better than expected at 38 cents compared to 40 cents. But the company also announced the closing of 400 stores in 2010 and their exit from Wal-Mart stores across the country. They also forecasted single digital revenue growth during the coming year. TaxCut is a popular software product available from H&R Block that allows tax filling through self preparation. This form of tax filing is become more popular as compared to the face to face tax preparation that has been the standard for the company for years.

Jackson Hewitt

Jackson Hewitt lost 66 cents per share during the most recent quarter. But the company is excited about manning 1,800 Wal-mart stores with tax preparers this coming tax season. The company also has a new online tax preparation product that they will be releasing for the first time this January. These two revenue growth outlets have investors feeling good about the company. The 17% jump in price is a good opportunity to take profits if you have help the stock for some time. Otherwise, wait for the stock to fall back to preannouncement levels before buying.

More...