Things are so sleepy in the tax-filing sector with April 15 so far away that you probably didn't even know that Jackson Hewitt Tax Service (NYSE:JTX) was public. Indeed, the country's second-largest tax-preparation specialist behind H&R Block (NYSE:HRB) went public back in June. It was spun off by Cendant (NYSE:CD), and last night it posted its first quarterly results as a stand-alone entity.
It wasn't a bad showing once you recognize the seasonal aspects of the tax business. It posted a narrower loss of $0.30 a share on a 52% surge in revenue during its July quarter.
Like H&R Block, Jackson Hewitt has tried to smooth out the seasonality by broadening its services. However, Jackson Hewitt has played it closer to home. While H&R Block has gone through everything from online services to residential mortgages, its smaller rival has stuck to cashing in on refund-anticipation loans and extended warrantees.
H&R Block has been aggressive on the tax-filing software front to compete with market leader Intuit (NASDAQ:INTU), but Jackson seems content to keep its active franchise business going without necessarily empowering the end user.
That may be a lucrative strategy, but with places such as our own Tax Center bringing consumers up to speed with tax-filing know-how, one has to wonder whether Jackson Hewitt being spun off in the first place wasn't a tactical move to allow the company the flexibility to fight aggressively in new potential markets.
While our Income Investor readers may appreciate that the freshly minted public company is paying out a 1.5% dividend out of the gate, shareholders will expect plenty of the liberated appendage. Growing the top line at a healthy pace is a great start. Let's just see whether it can keep it up when the April quarter of 2005 rolls around.
Do you rely on a tax pro like Jackson Hewitt or H&R Block to help you file your personal return, or do you go it alone? Is it too early or too late to start on tax-saving moves for 2004? All this and more in the Tax Strategies discussion board. Only on Fool.com.
Longtime Fool contributor Rick Munarriz forks over his taxes gladly. However, he does not own shares in any company mentioned in this story.
