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Jack Henry (JKHY) Down 0.7% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Jack Henry (JKHY). Shares have lost about 0.7% in that time frame, underperforming 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 catalysts.

Jack Henry Q3 Earnings & Revenues Top Estimates, Up Y/Y

Jack Henry & Associates reported third-quarter fiscal 2024 earnings of $1.19 per share, which beat the Zacks Consensus Estimate by 2.6%. The bottom line increased 6.3% from the year-ago quarter’s reported figure.

Revenues improved 5.9% from the year-ago quarter’s reading to $538.6 million. The figure beat the Zacks Consensus Estimate of $541.4 million.

JKHY’s non-GAAP revenues were $537.7 million, up 7% from the year-ago quarter.

Top-line growth was driven by increased services and support, and processing revenues.

Strong momentum across the Core, Payments, Complementary and Corporate segments contributed well.

Top Line in Detail

Services & Support: Jack Henry generated revenues of $305.1 million from the category (56.6% of revenues). The figure grew 4.5% from the year-ago quarter, owing to a 10.6% rise in data processing and hosting fees.

Processing: The category yielded $233.5 million in revenues (43.4% of revenues), up 7.8% from the year-ago quarter’s actual. This was attributed to a 26.1% increase in Jack Henry's digital revenues. Growing payment processing and card revenues contributed well.

Segments in Detail

Core: Revenues were $166.7 million (30.9% of the total revenues), rising 7.4% from the year-ago quarter. However, it met the Zacks Consensus Estimate.

Payments: Revenues summed up to $201.9 million (37.5% of the total revenues), increasing 5.3% from the year-ago quarter. The figure lagged the consensus mark of $203 million.

Complementary: Revenues were $149.2 million (27.7% of the total revenues), up 5.1% from the year-earlier quarter. The figure missed the Zacks Consensus Estimate of $152 million.

Corporate & Other: Revenues grossed $20.8 million (3.9% of the total revenues) and rose 5.8% from the prior-year quarter. The figure surpassed the consensus mark of $17.9 million.

Operating Details

In third-quarter fiscal 2024, total operating expenses were $426.5 million, a 6.6% increase from the prior-year quarter.

As a percentage of revenues, the figure expanded 50 basis points (bps) from the year-ago quarter to 79.2%.

The operating margin was 20.8%, contracting 50 bps from the year-ago quarter.

Balance Sheet

As of Mar 31, 2024, cash and cash equivalents totaled $27.3 million compared with $26.7 million as of Dec 31, 2023.

Trade receivables were $263.4 million in the reported quarter, down from $270.6 million in the previous fiscal quarter.

The current and long-term debt was $250 million at the end of third-quarter fiscal 2024 compared with $255 million at the end of the second quarter of fiscal 2024.

Guidance

For fiscal 2024, Jack Henry expects GAAP revenues of $2.215-$2.228 billion.

It expects non-GAAP revenues between $2.197 billion and 2.210 billion.

Management raised the guidance for earnings from $5.09-$5.13 to $5.15-$5.19 per share.

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How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended upward during the past month.

VGM Scores

Currently, Jack Henry has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. However, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, 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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