Jackson Hewitt Tax Service, Inc. (JTX)
The Company provides computerized preparation of federal, state and local individual income tax returns in the United States through a nationwide network of franchised and company-owned offices operating under the brand name.
Recs
EclecticRecluse
(75.45)
Submitted: 11/23/2009 2:07:48 PM :
Start Price:
$4.14
JTX Score:
-3.42
Low PEG and P/E
Recs
hymettus
(48.93)
Submitted: 10/30/2009 12:49:29 PM :
Start Price:
$4.89
JTX Score:
-24.32
Dear JTX,
Thanks for being so undervalued that I will now be able to purchase a pony for my daughter by Christmas with all the money I will make off of you. I don't see this one going any other way.
Recs
SuperTerminator
(< 20)
Submitted: 10/6/2009 3:49:04 PM :
Start Price:
$4.75
JTX Score:
-20.57
A great value play.
Recs
gusnbunny
(82.36)
Submitted: 9/19/2009 7:45:32 AM :
Start Price:
$4.63
JTX Score:
-17.95
Who is in a better position to benefit from the complexity that has been added to the tax code? $8k new home owner tax credit, Energy Efficiency tax credit, Cash for Clunkers etc. EP 3/09.
Recs
withoutlimits
(88.22)
Submitted: 6/7/2009 1:03:32 AM :
Start Price:
$6.19
JTX Score:
+54.00
Okay, Buckley is a great addition, but 41% in one day? Let's see what he does first.
Recs
OptionsWizard
(96.75)
Submitted: 3/31/2009 7:32:29 PM :
Start Price:
$5.14
JTX Score:
-63.94
Should go to 9 or 10. Buying this in real life.
Recs
StKitt
(99.88)
Submitted: 3/5/2009 2:39:09 PM :
Start Price:
$3.73
JTX Score:
-55.45
Lots of debt, but worth a punt on CAPS.
Recs
BigFatBEAR
(99.27)
Submitted: 3/5/2009 2:01:06 PM :
Start Price:
$3.74
JTX Score:
-55.68
Following tenmiles into this today, just to see if it survives.
Normally wouldn't have even thought of green-thumbing this, or if I did, I'd be too scared to do so.
Looks like ChapLev or a 3-bagger longer-term.
Recs
tenmiles
(99.99)
Submitted: 3/5/2009 12:17:48 PM :
Start Price:
$4.02
JTX Score:
-62.57
Taxing time for this one, in need of some relief on current debt covenants, but believe it will survive; high risk, but likely survivor. If so, outsized gains highly likely from current $4 level for those with 3-5 year time horizon.
Recs
jdlech
(48.72)
Submitted: 6/19/2008 12:29:38 PM :
Start Price:
$13.34
JTX Score:
-54.88
Long term dividend pick
Recs
OutstandingOdds
(98.26)
Submitted: 6/13/2008 10:21:35 AM :
Start Price:
$11.86
JTX Score:
-50.87
Investors have the opportunity to purchase this quality business with stable and growing cash flows at a depressed multiple to those cash flows...at roughly $12 JTX is just too cheap for a capital light business with above average growth prospects and a history of using its excess cash to buy back stock.
Although the near term outlook is admittedly not great, long term investors willing to take advantage of a classic case of "time arbitrage"...should be well compensated for there efforts, and not just because JTX is paying a 5.25% dividend yield (with a sustainable payout ratio). JTX also has several growth drivers that should propel EPS growth in the mid teens for years to come.
Despite the recent turmoil JTX is still a great business with little capital requirements, good growth potential, not to mention a huge addressable (& highly fragmented) market. Current negative sentiment makes it impossible to know how JTX will do over the next few months, but at today's prices patient investors with an eye towards the long term should enjoy outsized, risk-adjusted returns over the next 3-5 yrs
Recs
berkybucks
(88.57)
Submitted: 5/31/2008 11:23:50 AM :
Start Price:
$13.45
JTX Score:
-51.81
great growth rate
Recs
chitownjester
(48.88)
Submitted: 5/21/2008 4:28:24 PM :
Start Price:
$14.19
JTX Score:
+53.63
Disappointing 2Q numbers. Contrast this with the blowout quarter of Intuit. I think this speaks volumes about the state of the tax preparation industry. I myself have used TurboTax and HRB's TaxCut for years now- so should have seen this coming. Betting on trend to continue. People are looking to cut costs- why go to someone else to type the numbers into the computer for you? Why not do it yourself? Still pump your own gas?
Recs
ShanNoz
(< 20)
Submitted: 4/24/2008 11:53:21 AM :
Start Price:
$13.46
JTX Score:
-52.67
Those that have the money to invest will be looking for dividends
Recs
YoungInvestor99
(76.63)
Submitted: 4/7/2008 7:06:41 PM :
Start Price:
$13.40
JTX Score:
-53.85
It looks like the market thinks people don't pay taxes because a recession is looming. This will be back, it did not deserve the hit it took. Plus its an IV recommendation (not that I am totally impressed by all their picks)
Recs
hartwell1234
(< 20)
Submitted: 3/24/2008 4:20:31 PM :
Start Price:
$11.86
JTX Score:
+50.87
I just think it will
Recs
FocusOpportunity
(< 20)
Submitted: 3/7/2008 9:53:00 PM :
Start Price:
$12.16
JTX Score:
-55.41
A rare convergence of events have recently provided investors the opportunity to purchase this above average business at a bargain price. Today's price is just to cheap for this non capital intensive business with above average growth prospects, and a history of using every dime of free cash to buy back stock.
Recent results have undoubtedly been poor, but I see no reason to believe that JTX has suffered permanent erosion in the underlying value of its business. With only a 4% share of a large, growing, and fragmented market, my guess is that 10yrs from today JTX is likely to be both bigger and more profitable than it is today. Although, it will be nice to get paid a safe 5.25% dividend to wait.
Within 2-3yrs I expect annualized returns from todays price north of 20%, if not considerably higher.
Recs
TheLazyInvestor
(26.09)
Submitted: 3/4/2008 4:36:16 PM :
Start Price:
$13.46
JTX Score:
-56.18
I'm placing my bet that today's -32.58% drop in stock price is a market over-reaction. This should recover.
Recs
morningstarboy
(< 20)
Submitted: 2/21/2008 1:02:20 PM :
Start Price:
$20.77
JTX Score:
-65.33
As of close of business on 2/20/08, this was a 5-star Morningstar stock trading at less than half of its Morningstar fair value.
Recs
EarningsPower
(99.09)
Submitted: 2/15/2008 9:05:03 AM :
Start Price:
$22.61
JTX Score:
-72.25
Jackson Hewitt offers investors the potential for a double or more over the next 3-5yrs due to a variety of quantitative and qualitative characteristics that together create compelling opportunity for patient long term investors. At its current price, I believe this company is just too cheap for a non-capital intensive business with above average growth prospects, and a history of using excess cash flow to buy back stock.
When looking for investment opportunity, I generally look for companies in which posess several growth engines to drive earnings and free cash generation materially higher over the next 2-3 years. Companies like this reduce investment risk; if one growth engine fails or temporarily stalls, the other engines may still be driving the company's growth forward. JTX offers just such an opportunity. A list of JTX's earnings engines are listed below:
* A Young Store Base - over half of Jackson's stores are less than 5yr's old; this is important because as newer stores mature they process more tax returns, providing anywhere from 3-6% of volume growth.
* Inflation - Price inflation in the tax preparation business was and is about 4-6% a year. It is a function of two factors: price increases and the increasing complexity of tax returns (Jackson Hewitt charges a fee per form filled out, and the number of forms per tax return has been on the rise forever).
* New Stores - New stores growth should bring 3-6% annual revenue growth. This company has quite a long runway, considering it has only 4% market share in a fragmented and growing industry. Since most new stores growth is achieved through franchisees opening new stores, opening new stores doesn't consume much company capital. This company has almost infinite incremental return on capital, as incremental growth costs almost nothing, which leads to another engine of growth, margin expansion.
* Margin Expansion - Ninety percent of JTX's stores are operated by franchisees. This business model lends plenty of room to margin expansion: This should contribute another 2-3% to earnings growth on an annual basis.
* Share buybacks - Jackson Hewitt has been using every penny of its free cash flows to buy back stock, which should help earnings per share growth by 5-7% a year, depending on the company's valuation. The company should likely achieve that, while continuing to pay out 20% of its net income in dividends, adding another 1% or so to total return.
JTX's earnings drivers are likely to drive growth in EPS of somewhere between 17-28% a year. Such consistent and high quality growth, especially in today's environment, is pretty exceptional no matter which way you slice it.
The ability to purchase such high quality growth at a price nothing short of spectacular relative to its forward earning power provides the icing on the cake. Bottom line is that an investment in JTX should provide returns well in excess of the S&P with minimal chance of permanent capital loss, providing investors with a truly extraordinary value proposition.
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