Why Blackhawk Network Holdings Inc (NASDAQ: HAWK) stock is crashing

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Blackhawk Network Holdings Inc (NASDAQ: HAWK) stock fell over 16.9% this morning (as of 9:49AM EDT on October 12th, 2017; Source: Google finance) after the pre-paid card company projected a disappointing outlook for the year. For the year, HAWK expects the adjusted earnings in the range of $1.56 to $1.70 a share on adjusted operating revenue expected to be in the range of $940 million to $981 million. The analysts surveyed by FactSet expect the earnings of $1.68 a share on revenue of $1.11 billion

HAWK in the third quarter of FY 17 has reported the adjusted earnings per share of 18 cents, beating the analysts’ estimates for the adjusted earnings per share of 11 cents. The company had reported the adjusted revenue growth of 23.3 percent to $208.3 million in the third quarter of FY 17, missing the analysts’ estimates for revenue of $216.5 million. The revenue was low due to a shortfall in the Cardpool exchange business.  Therefore, HAWK’s third quarter 2017 earnings were in line with expectations on slightly softer revenues.

Moreover, Blackhawk Network in the third quarter saw strong top-line growth in the international and incentives businesses.  In addition, U.S. retail transaction dollar volume (TDV) has increased 13% related to the launch of Target as a distribution partner, strong growth in digital channels and the rebound from the EMV(1) impact on open loop products in 2016.  Post-EMV open loop sales are expected to finish the year as originally planned.  The volume from the Target account continues to ramp and the company is currently rolling out larger, upgraded fixtures at 1,800 Target stores in time for the holiday season.  HAWK also remain focused on margin expansion initiatives and are forecasting Adjusted EBITDA margin expansion of approximately 60 to 100 basis points for the full year 2017.

On the other hand, HAWK has announced that Jeffrey Fox has tendered his resignation as a director on the Board of Directors of the company effective on October 4th, 2017, due to other commitments, including his recent appointment as CEO of Endurance International Group.

HAWK stock has risen 38.86% in a year (source: Google Finance).

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