DATE: Saturday, November 15, 1997           TAG: 9711150321

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY TOM SHEAN, STAFF WRITER 

DATELINE: VIRGINIA BEACH                    LENGTH:   45 lines

NEW FRANCHISES HELP HEWITT STOCK SKYROCKET

Keith Alessi isn't taking any chances.

The chief executive of tax-preparation service Jackson Hewitt Inc. is meeting with the acting commissioner of the Internal Revenue Service next week. In December, he is scheduled to meet with the incoming commissioner, Charles O. Rossotti.

``Will they do anything to disrupt electronic filing of tax returns?'' Alessi wonders.

To curb fraudulent returns from individuals seeking earned income tax credits, the IRS scrutinized electronically filed returns in early 1995 and delayed refunds. Traffic at tax-preparation offices dried up, and Virginia Beach-based Jackson Hewitt ended its year with an operating loss of $1.08 million.

Whatever concerns Alessi might have about the IRS this year, Jackson Hewitt's investors are euphoric about the company's prospects. Since the beginning of 1997, they have bid up the price of its stockfrom less than $5 to more than $55.

Valued at more than 40 times its annual per-share earnings, the stock has been trading more like that of a biotech company than a retailer.

This stratospheric rise is due partly to the company's rapid addition of new territories, said Tony Cristello, an analyst with the Richmond-based securities firm Scott & Stringfellow Inc.

In addition, recent changes to the federal tax code will prompt more individuals to seek help with their returns, he said. That, in turn, should generate additional business for Jackson Hewitt.

Cristello said Scott & Stringfellow expects the company to earn $1.96 per share for the fiscal year ending next April 30 and $2.45 per share the following year.

Alessi said the company will have 1,900 stores open for the tax season beginning in January. That would be a 38 percent increase from the 1,372 open last filing season.

The total, said Alessi, will include 500 tax-preparation offices inside Wal-Mart stores. During the last tax season, Jackson Hewitt operated in 200 Wal-Mart locations. ILLUSTRATION: Chart

Price of Jackson Hewitt shares...

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