Jack Henry & Associates Inc (JKHY)

Conclusion

Jack Henry & Associates is a US financial technology company that supplies core processing platforms, payment processing and related software to banks and credit unions. The shares closed at 171.20 USD on 2026-11-09, giving a market capitalisation of 12.0 billion USD.

The verdict is undervalued. The P/E of 23.1x is below its ten-year median of 32.5x, and EV/EBITDA of 13.6x is below its median of 17.9x. The discounted cash flow gives 205.01 USD per share at a discount rate of 8.9%. The fair value band runs from 174.79 to 262.18 USD with a midpoint of 218.49 USD, a margin of safety of 27.6%. The price of 171.20 USD sits just below the low end of that band. The reverse DCF implies growth of 3.7% a year, while revenue grew at a five-year CAGR of 7.3% and free cash flow per share at 19.1%.

The strongest numbers are ROIC of 23.7% against a WACC of 8.9%, free cash flow conversion of 138.2% on a trailing basis, and eight earnings beats in the last eight quarters. The weakest are the terminal value share of 57.4% of the DCF, which places much of the value far in the future, the ten-year revenue CAGR of 6.3%, and the next-year estimate revisions, where two analysts cut their estimates in the last 30 days while three raised them.

Financial health

Financial strength is grey, because the company is a financial business and its debt is part of its trade, so the scorecard cannot assess it in the usual way. Net debt to EBITDA of 0.09 and interest coverage of 111.1x are both low. The current ratio and quick ratio are not available in the data provided.

Debt to equity is 0.04. The Altman Z-score is 2241.57, in the safe zone, but the model was designed for manufacturers and this company is not one, so the figure should be read with caution. Insolvency risk: these models do not apply to a financial business, so no probability is given.

Earnings quality

Earnings quality is green, supported by free cash flow conversion of 110.2% over five years and a negative share count change of -0.97% a year, which points to buybacks. Free cash flow conversion on a trailing basis is 138.2%, and the accrual ratio of -0.0837 means cash earnings exceed reported earnings.

Stock-based compensation is 1.25% of revenue, and free cash flow after stock-based compensation is 685.0 million USD. The Piotroski score is 7 of 8 evaluable tests passed. The Beneish M-score reading is not available in the data provided. The company beat earnings estimates in all eight of the last quarters, with an average surprise of 9.5%.

Profitability

Profitability is green. The operating margin of 25.3% is above its ten-year median of 23.5%, and the net margin of 20.0% is above its median of 17.7%. The gross margin of 43.8% is above its median of 41.6%. The operating margin has been stable, with a stability measure of 5.3%.

ROIC of 23.7% against a WACC of 8.9% gives a ROIC minus WACC value of 14.8%, which the company's data labels as creating value. The five-year median ROIC is 19.5%. The DuPont split shows a net margin of 20.1%, an asset turnover of 0.79 and an equity multiplier of 1.53. Return on equity of 24.7% therefore rests mainly on margins, not on leverage.

Growth

Growth is green. Revenue compound growth is 6.3% over three years, 7.3% over five years and 6.3% over ten years. Revenue grew in all ten comparable years. Earnings per share compound at 11.6% over three years, 11.1% over five years and 8.4% over ten years.

Free cash flow per share grew at 59.3% over three years, 19.1% over five years and 9.6% over ten years. The next-year earnings estimate implies growth of 9.4%.

Valuation

Valuation is green, with the verdict undervalued. The P/E of 23.1x is 28.8% below its ten-year median of 32.5x. EV/EBITDA of 13.6x is 24.0% below its median of 17.9x, P/FCF of 16.7x is 45.9% below its median of 30.9x, P/S of 4.63x is 26.2% below its median of 6.28x, and P/B of 5.72x is 24.7% below its median of 7.59x.

The DCF gives 205.01 USD per share at a discount rate of 8.9%, with terminal value making up 57.4% of the result. The fair value from historical multiples is 231.96 USD. The fair value band runs from 174.79 to 262.18 USD, with a midpoint of 218.49 USD and a margin of safety of 27.6%. These are order-of-magnitude estimates built on fixed assumptions, not price targets. The reverse DCF implies growth of 3.7%, against five-year revenue growth of 7.3% and five-year free cash flow per share growth of 19.1%. The dividend yield is 1.42% and the payout on free cash flow is 23.8%.

Risks

The weakest numbers would hurt the case in specific ways. A terminal value share of 57.4% means that lower long-term cash flows or a higher discount rate would reduce the DCF materially. Ten-year revenue growth of 6.3% leaves little room for error if growth slows. The two downward estimate revisions in the last 30 days for the next year could signal weakening expectations.

The current ratio, quick ratio and Beneish M-score are not available in the data provided. The analysis has no debt maturity schedule and no revenue split by segment, so refinancing risk and the contribution of each business line cannot be assessed. The Altman Z-score is not a reliable guide for this company.