JTH Holding Upped to Strong Buy - Analyst Blog

On Mar 19, Zacks Investment Research upgraded Liberty Tax Service's parent company, JTH Holding, Inc. TAX to a Zacks Rank #1 (Strong Buy). Estimates have been rising ever since the company reported strong third-quarter fiscal 2014 results.

Why the Upgrade?

JTH Holding posted strong third-quarter fiscal 2014 (ending Jan 31) on Mar 13. The results included a substantial positive earnings surprise of 4.8%. Following the earnings release, shares of this property and casualty insurer gained nearly 0.9% to close at $27.05 on Mar 19.

JTH Holding's  third-quarter fiscal 2014 net income of 28 cents per share was significantly better than 12 cents earned in the year-ago period. The result also exceeded the Zacks Consensus Estimate of 8 cents per share.

Bottom-line growth was largely attributable to increased market share and focus on JTH Holding's high performers.

Moreover, JTH Holding's total revenue amounted to $40.7 million during the reported quarter, escalating 8.3% year over year. The increase in revenues was attributable to higher royalties and advertising fees, financial products and tax preparation fees. These were driven by increased returns and average net fees.

Additionally, total long-term debt amounted to $22 million at the end of third-quarter fiscal 2014, reflecting an improvement from $24.3 million at fiscal 2013-end.

Also, the company is witnessing rising earnings estimates following its strong financial results. The Zacks Consensus Estimate for 2015 has increased 5.6% year over year to $1.90 per share. For 2014, the Zacks Consensus Estimate is currently pegged at $1.60 per share.

Zacks Rank

Some other top-ranked stocks in the business services industry worth mentioning are Odyssey Marine Exploration Inc. OMEX, SouFun Holdings, Ltd. SFUN and ExamWorks Group, Inc. EXAM. While Odyssey Marine Exploration and SouFun Holdings both sport a same Zacks Rank as JTH Holding, ExamWorks Group carries a Zacks Rank #2 (Buy).