Jack Henry & Associates, Inc. (JKHY) | Investment Case

1. Company Snapshot

1.a. Company Description

Jack Henry & Associates, Inc.provides technology solutions and payment processing services primarily for financial services organizations in the United States.It operates through four segments: Core, Payments, Complementary, and Corporate and Other.

The company offers information and transaction processing solutions for banks ranging from community to multi-billion-dollar asset institutions under the Jack Henry Banking brand; core data processing solutions for various credit unions under the Symitar brand; and specialized financial performance, imaging and payments processing, information security and risk management, retail delivery, and online and mobile solutions to financial institutions and corporate entities under the ProfitStars brand.It also provides a suite of integrated applications required to process deposit, loan, and general ledger transactions, as well as to maintain centralized customer/member information; and complementary products and services that enable core bank and credit union clients to respond to evolving customer/member demands.The company's Jack Henry Banking business brand offers SilverLake, a robust primarily designed for commercial-focused banks; CIF 20/20, a parameter-driven, easy-to-use system for banks; and Core Director, a cost-efficient system with point-and-click operation.

Its Symitar business brand provides Episys, a robust designed for credit unions.In addition, the company offers digital products and services and electronic payment solutions; purchases and resells hardware systems, including servers, workstations, scanners, and other devices; and provides implementation, training, and support services.Jack Henry & Associates, Inc.

was founded in 1976 and is headquartered in Monett, Missouri.

Show Full description

1.b. Last Insights on JKHY

Jack Henry & Associates, Inc.'s recent performance was negatively impacted by decreased institutional investor holdings. Capital International Investors reduced its stake by 60.3%, while Capital Group Private Client Services Inc. and Copeland Capital Management LLC also lessened their holdings. Additionally, Davis R M Inc. and Illinois Municipal Retirement Fund sold shares. Despite a "Moderate Buy" rating from brokerages, with a 25.39% upside potential, the company's growth prospects are uncertain. The recent earnings release showed record revenue and strategic wins, but competitive pressures persist. Institutional investors' decreased holdings may have contributed to the stock's downward trend.

1.c. Company Highlights

Last Price	147.2
Change Percentage	-4.03%
Open	151.73
Previous Close	153.38
Market Cap ( Millions)	10654
Volume	1185364
Year High	193.39
Year Low	144.12
M A 50	163.7
M A 200	167.69

FCF Yield	6.11%
Dividend Yield	1.59%
ROE	23.75%
Debt / Equity	4.88%
Net Debt / EBIDTA	9.09%
Price To Book	4.86
Price Earnings Ratio	21.1
Price To FCF	16.35
Price To sales	4.34
EV / EBITDA	12.38

2. Jack Henry's Q2 FY2026 Earnings: A Strong Performance

Jack Henry reported a robust second quarter with non-GAAP revenue of $611 million, up 6.7% year-over-year, and non-GAAP operating margin of 25.1%, representing a significant 355 basis points expansion. Earnings per share (EPS) came in at $1.72, beating estimates of $1.43. The company's core segment non-GAAP revenue increased 7% for the quarter, with operating margin expanding 5 basis points. The payments segment also saw strong growth, with non-GAAP revenue up 6% and operating margin expanding 200 basis points.

Publication Date: Feb -09

                                    📋 Highlights
                                    Record Non-GAAP Revenue::
                                                Q2 non-GAAP revenue reached $611 million, a 6.7% increase YoY.
Margin Expansion::
                                                Non-GAAP operating margin hit 25.1%, up 355 basis points YoY.
Market Share Growth::
                                                Core market share rose 17% with banks and 40% with credit unions over 8 years.
Stablecoin Initiative::
                                                Beta testing USDC transactions with multiple institutions after a 2-week proof of concept.
Fiscal 2026 Guidance::
                                                Non-GAAP revenue growth guidance raised to 6.4–7.1%, with free cash flow conversion at 90–100%.

                                

Revenue Growth Drivers

The company's revenue growth was driven by the resilience in card-related services, consistent growth in the EPS business, and rapid growth from faster payments. The complementary segment also saw impressive revenue growth of 9%, with healthy margin expansion. According to Greg Adelson, "We're seeing strong early success with Jack Henry Rapid Transfers, which allows both SMBs and consumers to quickly move funds between external accounts, eligible cards, and digital wallets."

Valuation and Outlook

With a P/E Ratio of 24.74 and an EV/EBITDA of 15.51, the market appears to have priced in a certain level of growth. The company's ROIC of 18.43% and ROE of 23.75% indicate strong profitability. For fiscal 2026, the company has updated its guidance, with GAAP revenue growth expected to be in the range of 8-9% and non-GAAP revenue growth expected to be in the range of 6.4-7.1%. Analysts estimate next year's revenue growth at 6.3%, indicating a continued strong performance.

Strategic Initiatives

The company is making significant investments in its strategic initiatives, including the development of its stablecoin strategy and the launch of its new enterprise account opening platform. According to Greg Adelson, the company is "evaluating over 20 stablecoin infrastructure, compliance, and payment fintechs to ensure we have best-of-breed partners for this critical initiative." These initiatives are expected to drive future growth and expand the company's offerings in the financial services space.

Market Share and Competitive Advantage

Jack Henry continues to win in a consolidating market, with its core market share among banks increasing by 17% and among credit unions by 40% over the past 8 years. The company's strong relationship with over 80% of the financial institutions in the U.S. gives it a significant competitive advantage. As Greg Adelson noted, "Our culture and service reputation are key factors in our ability to win deals."

3. NewsRoom

3 "Tollbooth" Stocks With Hidden Monopolies in Their Industries

Apr -05

Source: marketbeat.com

Draganfly (NASDAQ:DPRO) versus Jack Henry & Associates (NASDAQ:JKHY) Head-To-Head Comparison

Mar -27

Source: defenseworld.net

The Future Doesn't Carry Cash: Top Mobile Payments Stocks to Buy

Mar -26

Source: zacks.com

Wall Street Analysts Predict a 25.39% Upside in Jack Henry (JKHY): Here's What You Should Know

Mar -25

Source: zacks.com

FM BANK and Quoin Financial Bank Select Jack Henry to Elevate Service

Mar -24

Source: prnewswire.com

Buy 3 Giant Mobile Payments Stocks With Solid Short-Term Price Upside

Mar -23

Source: zacks.com

Nordea Investment Management AB Has $132.70 Million Holdings in Jack Henry & Associates, Inc. $JKHY

Mar -23

Source: defenseworld.net

Jack Henry & Associates, Inc. (NASDAQ:JKHY) Receives Average Rating of “Moderate Buy” from Brokerages

Mar -23

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.39%)

6. Segments

Payments

Expected Growth: 8%

The 8% growth in payments from Jack Henry & Associates, Inc. is driven by increasing adoption of digital banking solutions, rising demand for payment processing services, and strategic partnerships with financial institutions. Additionally, the company's investments in cloud-based infrastructure and innovative payment technologies have enhanced its scalability and competitiveness, contributing to the growth.

Core

Expected Growth: 6%

Core segment growth of 6% at Jack Henry & Associates, Inc. is driven by increasing demand for digital banking and payment solutions, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on innovation, customer relationships, and operational efficiency also contribute to its growth.

Complementary

Expected Growth: 5%

Complementary growth driven by increasing demand for digital banking and payment solutions, expansion into new markets, strategic partnerships, and innovative product offerings. Additionally, the company's focus on cloud-based services, cybersecurity, and data analytics has contributed to its growth.

Corporate and Other Segment

Expected Growth: 4%

The 4% growth in Corporate and Other Segment of Jack Henry & Associates, Inc. is driven by increasing demand for digital banking and payment solutions, strategic acquisitions, and expansion of existing customer relationships. Additionally, the company's investments in innovation and technology, such as cloud-based services and data analytics, are contributing to revenue growth.

7. Detailed Products

Core Director

A core banking system that provides a comprehensive platform for managing customer accounts, transactions, and banking operations.

Symitar Episys

A core processing system designed for credit unions, offering a range of features for managing member accounts, transactions, and operations.

Silverlake System

A core banking system that provides a comprehensive platform for managing customer accounts, transactions, and banking operations.

JHA Payment Processing

A payment processing solution that enables financial institutions to process transactions, manage payment networks, and provide card services.

JHA Card Processing

A card processing solution that enables financial institutions to issue and manage debit and credit cards, as well as provide cardholder services.

JHA Online Banking

An online banking platform that enables financial institutions to provide online banking services to customers.

JHA Mobile Banking

A mobile banking platform that enables financial institutions to provide mobile banking services to customers.

8. Jack Henry & Associates, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Jack Henry & Associates, Inc. is low due to the company's strong brand recognition and customer loyalty in the financial technology industry.

Bargaining Power Of Customers

The bargaining power of customers for Jack Henry & Associates, Inc. is medium due to the presence of some large financial institutions that can negotiate prices, but the company's diversified customer base mitigates this risk.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Jack Henry & Associates, Inc. is low due to the company's ability to negotiate prices with its suppliers and the availability of alternative suppliers.

Threat Of New Entrants

The threat of new entrants for Jack Henry & Associates, Inc. is medium due to the presence of some barriers to entry, such as high capital requirements and regulatory hurdles, but the company still needs to innovate to stay ahead of potential new competitors.

Intensity Of Rivalry

The intensity of rivalry for Jack Henry & Associates, Inc. is high due to the presence of several established competitors in the financial technology industry, leading to a competitive pricing environment and a need for the company to differentiate itself.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	28.96%
Debt Cost	7.09%
Equity Weight	71.04%
Equity Cost	7.26%
WACC	7.21%
Leverage	40.76%

11. Quality Control: Jack Henry & Associates, Inc. passed 6 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Leidos

A-Score: 6.0/10

Value: 4.6

Growth: 6.6

Quality: 5.9

Yield: 2.0

Momentum: 8.0

Volatility: 9.0

1-Year Total Return ->

Jack Henry

A-Score: 5.5/10

Value: 2.5

Growth: 5.7

Quality: 8.4

Yield: 2.0

Momentum: 5.0

Volatility: 9.7

1-Year Total Return ->

CACI

A-Score: 5.3/10

Value: 3.8

Growth: 6.2

Quality: 5.2

Yield: 0.0

Momentum: 9.0

Volatility: 7.7

1-Year Total Return ->

Dolby Laboratories

A-Score: 5.1/10

Value: 3.5

Growth: 3.3

Quality: 8.5

Yield: 3.0

Momentum: 3.0

Volatility: 9.0

1-Year Total Return ->

ExlService

A-Score: 4.9/10

Value: 2.5

Growth: 7.9

Quality: 6.9

Yield: 0.0

Momentum: 4.0

Volatility: 8.3

1-Year Total Return ->

ASGN

A-Score: 4.1/10

Value: 7.7

Growth: 6.2

Quality: 5.2

Yield: 0.0

Momentum: 0.0

Volatility: 5.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

0.38%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.21%

Jack Henry & Associates, Inc. - US4262811015

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on JKHY

1.c. Company Highlights

Less Volatile

Better Quality

Expensive

Earnings Beats

Revenues Miss

Higher Yield

Earnings Miss

Average Yield

Fairly Valued

Average Quality

Lower Growth

Weak Momentum

Revenues Beats

2. Jack Henry's Q2 FY2026 Earnings: A Strong Performance

Revenue Growth Drivers

Valuation and Outlook

Strategic Initiatives

Market Share and Competitive Advantage

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.39%)

6. Segments

Payments

Expected Growth: 8%

Core

Expected Growth: 6%

Complementary

Expected Growth: 5%

Corporate and Other Segment

Expected Growth: 4%

7. Detailed Products

Core Director

Symitar Episys

Silverlake System

JHA Payment Processing

JHA Card Processing

JHA Online Banking

JHA Mobile Banking

8. Jack Henry & Associates, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Jack Henry & Associates, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

147.2$

Current Price

147.2$

Potential

-0.00%

12.e Scoring ^Insights

12.f DCF ^BETA