JTH Holding Misses on Earnings, Shares Gain on Y/Y Growth - Analyst Blog

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Liberty Tax Service's parent company, JTH Holding Inc ., ( TAX ) reported fourth-quarter fiscal 2014 (ending Apr 30) net income of $2.18 per share, missing the Zacks Consensus Estimate by about 4%. However, the bottom line increased 8% year over year on improved top line.

The company's shares hit the 52-week high of $30.33 yesterday, following the year-over-year improvement. At the close of trading, the share price was $27.79, up 6.1%.

Behind the Headlines

JTH Holding reported total revenue of $103.6 million, surpassing the Zacks Consensus Estimate of $102 million and improving 11% year over year. The increase was attributable to higher franchise fees, royalties and advertising fees, financial products, interest income and tax preparation fees.

On the other hand, JTH Holding's total operating expenses escalated 4.1% year over year to $51.1 million. Higher advertising expense, and depreciation, amortization and impairment expense largely drove the increase.

A higher magnitude of increase in revenues offset the increase in expenses, resulting in operating income improvement of 12%.

Fiscal Highlights

JTH Holding delivered fiscal 2014 adjusted net income of $1.45 per share on revenues of $159.7 million. Both top and bottom line represent year-over-year improvement of 8% and 4%, respectively. The bottom line, however, missed the Zacks Consensus Estimate of $1.50.

In fiscal 2014, the company served 2.4 million customers in the U.S and Canada, reflecting an increase of 6%.

Tax returns prepared in offices in the U.S. grew 5%, better than the IRS reported growth rate of 0.7%, with average net fee increasing 6%. Higher average net fee coupled with higher number of returns processed fueled the revenue growth.

Financial Update

Total assets of JTH Holding were approximately $198.8 million as of Apr 30, up 17% from $169.5 million at 2013 fiscal end.

Total cash and cash equivalents surged 142% year over year to $46.1 million as of Apr 30.

Total long-term debt amounted to $21.7 million at the end of fiscal 2014, reflecting an improvement of about 11% from $24.3 million at 2013 fiscal end.

JTH Holding's cash flow from operations totaled $43.5 million in fiscal 2014, improving 53% over fiscal 2013. Given higher cash flows, the company has bought back 0.8 million shares this month.

Zacks Rank and Others

JTH Holding presently carries a Zacks Rank #3 (Hold). Some better-ranked stocks - Avis Budget Group, Inc . ( CAR ) with a Zacks Rank #1 (Strong Buy) and ExamWorks Group, Inc . ( EXAM ) and Viad Corp . ( VVI ) with a Zacks Rank #2 (Buy) - surpassed their respective Zacks Consensus Estimate in last reported quarter.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: CAR , EXAM , VVI , TAX

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