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Why Is Jack Henry (JKHY) Down 0.4% Since Last Earnings Report?
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A month has gone by since the last earnings report for Jack Henry (JKHY - Free Report) . Shares have lost about 0.4% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Jack Henry due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Jack Henry's Q2 Earnings Beat
Jack Henry & Associates reported second-quarter fiscal 2021 earnings of 94 cents per share, which surpassed the Zacks Consensus Estimate by 6.8%. However, the bottom line fell 21% sequentially and remained flat year over year.
Revenues improved 1% year over year but declined 6.5% sequentially to $422.4 million. Further, the top line missed the Zacks Consensus Estimate of $431.9 million.
The company’s non-GAAP revenues were $420.2 million, up 2.4% from the year-ago quarter but down5.8% from the prior quarter.
Year-over-year revenue growth was driven by strength across Core, Payments and Complementary segments in the reported quarter. Additionally, accelerating processing revenues contributed to the results.
However, sluggishness in the Corporate segment, and declining services and support revenues were overhangs.
Top Line in Detail
Services & Support: The company generated revenues of $250.9 million from this category (59% of revenues). Notably, the figure declined 2% from the year-ago quarter due to a decrease in deconversion fee revenues. Nevertheless, the company witnessed growth in data processing and hosting fees in the reported quarter.
Processing: The category yielded revenues of $171.5 million (41% of revenues) in the reported quarter, up 5% year over year. This can be attributed to growth in processing transaction volumes, which led to a hike in digital and remittance revenues.
Segments in Detail
Core: The company generated revenues of $134.9 million from the segment (32% of total revenues), improving 1% year over year.
Payments: The segment yielded revenues of $155.2 million (36.7% of total revenues), increasing 2% from the year-ago quarter.
Complementary: The segment generated $121.4 million revenues (28.7% of total revenues), increasing 3% year over year.
Corporate & Other: The company generated revenues of $10.8 million from the segment (2.6% of total revenues), down 28.9% from the prior-year quarter.
Operating Details
In second-quarter fiscal 2021, total operating expenses were $328.7 million, reflecting a year-over-year increase of 1%. This can primarily be attributed to higher personnel costs and rising expenses related to the company’s card processing platform.
As a percentage of revenues, the figure expanded 20 basis points year over year to 77.8%.
Notably, operating margin was 22% in the reported quarter, which remained flat on a year-over-year basis.
Balance Sheet
As of Dec 31, 2020, cash and cash equivalents totaled $147.8 million, which decreased from $195.3 million as of Sep 30, 2020.
Trade receivables were $212.9 million in the reported quarter, down from $223 million in the previous quarter.
Further, the current and long-term debt stood at $266,000 at the end of the fiscal second quarter compared with $295,000 at the end of first-quarter fiscal 2021.
Guidance
For fiscal 2021, the company’s projection for GAAP revenues remains unchanged at $1.76 billion-$1.77 billion.
Further, the company expects non-GAAP revenues between $1.73 billion and $1.74 billion.
Further, the company raised the earnings per share outlook for fiscal 2021 from $3.75-$3.80 to $3.85-$3.90.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
At this time, Jack Henry has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Jack Henry has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Jack Henry (JKHY) Down 0.4% Since Last Earnings Report?
A month has gone by since the last earnings report for Jack Henry (JKHY - Free Report) . Shares have lost about 0.4% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Jack Henry due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Jack Henry's Q2 Earnings Beat
Jack Henry & Associates reported second-quarter fiscal 2021 earnings of 94 cents per share, which surpassed the Zacks Consensus Estimate by 6.8%. However, the bottom line fell 21% sequentially and remained flat year over year.
Revenues improved 1% year over year but declined 6.5% sequentially to $422.4 million. Further, the top line missed the Zacks Consensus Estimate of $431.9 million.
The company’s non-GAAP revenues were $420.2 million, up 2.4% from the year-ago quarter but down5.8% from the prior quarter.
Year-over-year revenue growth was driven by strength across Core, Payments and Complementary segments in the reported quarter. Additionally, accelerating processing revenues contributed to the results.
However, sluggishness in the Corporate segment, and declining services and support revenues were overhangs.
Top Line in Detail
Services & Support: The company generated revenues of $250.9 million from this category (59% of revenues). Notably, the figure declined 2% from the year-ago quarter due to a decrease in deconversion fee revenues. Nevertheless, the company witnessed growth in data processing and hosting fees in the reported quarter.
Processing: The category yielded revenues of $171.5 million (41% of revenues) in the reported quarter, up 5% year over year. This can be attributed to growth in processing transaction volumes, which led to a hike in digital and remittance revenues.
Segments in Detail
Core: The company generated revenues of $134.9 million from the segment (32% of total revenues), improving 1% year over year.
Payments: The segment yielded revenues of $155.2 million (36.7% of total revenues), increasing 2% from the year-ago quarter.
Complementary: The segment generated $121.4 million revenues (28.7% of total revenues), increasing 3% year over year.
Corporate & Other: The company generated revenues of $10.8 million from the segment (2.6% of total revenues), down 28.9% from the prior-year quarter.
Operating Details
In second-quarter fiscal 2021, total operating expenses were $328.7 million, reflecting a year-over-year increase of 1%. This can primarily be attributed to higher personnel costs and rising expenses related to the company’s card processing platform.
As a percentage of revenues, the figure expanded 20 basis points year over year to 77.8%.
Notably, operating margin was 22% in the reported quarter, which remained flat on a year-over-year basis.
Balance Sheet
As of Dec 31, 2020, cash and cash equivalents totaled $147.8 million, which decreased from $195.3 million as of Sep 30, 2020.
Trade receivables were $212.9 million in the reported quarter, down from $223 million in the previous quarter.
Further, the current and long-term debt stood at $266,000 at the end of the fiscal second quarter compared with $295,000 at the end of first-quarter fiscal 2021.
Guidance
For fiscal 2021, the company’s projection for GAAP revenues remains unchanged at $1.76 billion-$1.77 billion.
Further, the company expects non-GAAP revenues between $1.73 billion and $1.74 billion.
Further, the company raised the earnings per share outlook for fiscal 2021 from $3.75-$3.80 to $3.85-$3.90.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
At this time, Jack Henry has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Jack Henry has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.