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Jack Henry & Associates (JKHY)
NASDAQ:JKHY
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Jack Henry & Associates
(NASDAQ:JKHY)77Outperform
Positive Factors
Earnings
Shares higher on solid F2Q print.
Sales Performance
Bookings remained strong in the quarter, with JKHY reporting record sales attainment, solid core renewals, and adoption of complementary solutions.
Negative Factors
Bank M&A Risks
Potential headwinds from bank M&A resumption present risk to medium-term estimates.
Free Cash Flow Concerns
Investors express concern over free cash flow conversion being below historical levels and fear debit volume deceleration.
Growth Limitations
Despite years of investments and innovation, slowing revenue and EPS growth and lofty valuations limit share upside.
Jack Henry & Associates (JKHY) vs. S&P 500 (SPY)
Market Cap
$12.65B
Dividend Yield1.27%
Average Volume (3M)595.01K
Price to Earnings (P/E)31.3
Beta (1Y)0.53
Revenue Growth5.36%
EPS Growth8.62%
CountryUS
Employees7,170
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)5.54
Shares Outstanding72,897,675
10 Day Avg. Volume624,419
30 Day Avg. Volume595,015
Financial Highlights & Ratios
PEG Ratio3.63
Price to Book (P/B)N/A
Price to Sales (P/S)5.57
Price to Cash Flow (P/CF)35.30
P/FCF Ratio34.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$184.14Price Target Upside4.02% Upside
Rating ConsensusHold
Number of Analyst Covering9
Jack Henry & Associates Business Overview & Revenue Model
Company DescriptionJack Henry & Associates, Inc. (JKHY) is a leading provider of technology solutions and payment processing services primarily for financial institutions. The company operates across three primary sectors: core banking, payments, and information security. Its core products include banking platforms, payment processing systems, and risk management solutions, all designed to enhance operational efficiency and customer engagement for banks and credit unions.
How the Company Makes MoneyJack Henry & Associates generates revenue through a diversified model that includes software licensing, subscription services, and transaction-based fees. The company earns money by providing core banking software to financial institutions, which typically involves upfront licensing fees and ongoing maintenance or subscription fees. Additionally, JKHY offers payment processing services, generating revenue from transaction fees each time a payment is processed through their systems. The company also benefits from strategic partnerships with financial institutions and technology providers, enhancing its service offerings and expanding its market reach. These partnerships and a focus on innovation and security contribute significantly to its earnings.
Jack Henry & Associates Financial Statement Overview
Summary
Jack Henry & Associates exhibits strong financial health with robust revenue and profit growth, solid profitability margins, and effective cash flow management. The balance sheet is well-positioned with zero debt in the latest period, reducing leverage risk. However, cash and equivalents are low, which might limit liquidity flexibility.Income Statement
Jack Henry & Associates demonstrates strong revenue growth with an upward trajectory from $1.69 billion in 2020 to $2.27 billion in TTM (Trailing-Twelve-Months) 2024. Both the gross profit margin and net profit margin are robust, reflecting effective cost management and high profitability. The EBIT and EBITDA margins are consistently healthy, showing operational efficiency. However, the EBIT margin shows slight volatility over the years, which could indicate fluctuations in operating costs.85
Very Positive
Balance Sheet
The balance sheet of Jack Henry is solid with substantial stockholders' equity of $1.84 billion in 2024 and a strong decrease in total debt to $0 in the TTM of 2024, indicating excellent financial health and low leverage risk. The equity ratio is strong, reflecting a solid equity base relative to assets. However, cash and equivalents are low, potentially limiting liquidity flexibility.75
Positive
Cash Flow
The company shows strong free cash flow generation with consistent growth, highlighting good cash conversion capabilities. The operating cash flow to net income ratio is favorable, indicating efficient cash generation from operations. The free cash flow to net income ratio remains healthy, underscoring solid cash management. Despite this, there are fluctuations in investing and financing cash flows, which should be monitored.80
Positive
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 2.27B | 2.22B | 2.08B | 1.94B | 1.76B | 1.70B | Gross Profit |
| 941.53M | 916.07M | 858.64M | 814.27M | 694.83M | 688.60M | EBIT |
| 514.82M | 489.39M | 480.69M | 297.03M | 223.12M | 380.63M | EBITDA |
| 636.41M | 714.31M | 680.37M | 652.27M | 398.72M | 459.97M | Net Income Common Stockholders |
| 405.21M | 381.82M | 366.65M | 362.92M | 311.47M | 296.67M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 38.28M | 38.28M | 12.24M | 48.79M | 50.99M | 213.34M | Total Assets |
| 2.92B | 2.92B | 2.77B | 2.46B | 2.34B | 2.43B | Total Debt |
| 209.60M | 209.60M | 275.00M | 115.07M | 100.19M | 323.00K | Net Debt |
| 171.32M | 171.32M | 262.76M | 66.28M | 49.20M | -213.02M | Total Liabilities |
| 1.08B | 1.08B | 399.73M | 1.07B | 1.02B | 878.79M | Stockholders Equity |
| 1.84B | 1.84B | 1.61B | 1.38B | 1.32B | 1.55B |
| Cash Flow | Free Cash Flow | ||||
| 340.46M | 335.62M | 174.57M | 313.24M | 304.29M | 333.02M | Operating Cash Flow |
| 535.91M | 568.04M | 381.56M | 504.63M | 462.13M | 510.53M | Investing Cash Flow |
| -249.01M | -240.16M | -409.67M | -196.34M | -162.25M | -197.91M | Financing Cash Flow |
| -287.96M | -301.83M | -8.43M | -310.49M | -462.23M | -192.91M |
Jack Henry & Associates Technical Analysis
Positive
177.02
Price Trends
173.37
Positive
175.93
Positive
171.74
Positive
Market Momentum
0.48
Negative
60.33
Neutral
79.96
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JKHY, the sentiment is Positive. The current price of 177.02 is above the 20-day moving average (MA) of 172.01, above the 50-day MA of 173.37, and above the 200-day MA of 171.74, indicating a bullish trend. The MACD of 0.48 indicates Negative momentum. The RSI at 60.33 is Neutral, neither overbought nor oversold. The STOCH value of 79.96 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JKHY.
Jack Henry & Associates Risk Analysis
Jack Henry & Associates disclosed 25 risk factors in its most recent earnings report. Jack Henry & Associates reported the most risks in the “Tech & Innovation” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Jack Henry & Associates Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $54.73B | 31.98 | 43.80% | 2.56% | 4.18% | 5.67% | |
79 Outperform | $1.84B | 21.10 | 30.74% | 1.86% | 2.39% | 39.20% | |
77 Outperform | $12.65B | 31.30 | 20.51% | 1.27% | 5.36% | 8.62% | |
77 Outperform | $127.53B | 32.70 | 77.46% | 1.80% | 7.09% | 11.51% | |
73 Outperform | $25.52B | 16.72 | 7.05% | 0.97% | 4.68% | 63.39% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% | |
51 Neutral | $37.02B | 49.29 | 2397.44% | 1.99% | -17.38% | ― |
* Technology Sector Average
Performance Comparison
JKHY
Jack Henry & Associates
177.02
4.91
2.85%
ADP
Automatic Data Processing
313.44
74.92
31.41%
CSGS
CSG Systems International
63.93
12.00
23.11%
FIS
Fidelity National Info
69.89
1.34
1.95%
GPN
Global Payments
99.54
-27.57
-21.69%
PAYX
Paychex
152.00
34.75
29.64%
Jack Henry & Associates Earnings Call Summary
Earnings Call Date: Feb 4, 2025 | % Change Since: 1.69% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance, record sales, and client retention, alongside notable awards and recognition. However, there were challenges related to declining deconversion and hardware revenue, and increased operating expenses.Highlights
Exceeding Financial Expectations
Non-GAAP revenue growth of 6.1% in Q2, exceeding the 6% guidance. Non-GAAP operating margin of 21.5% was also slightly better than expected.
Record Sales Performance
Achieved record sales in Q2 for the second consecutive quarter with eleven competitive core wins and thirteen deals moving existing clients to the private cloud.
Client Renewal Success
Closed twenty-eight core renewals in Q2, a 21% increase over the first six months of last year, with a core retention rate over 99%.
Recognition and Awards
Scimitar core platform ranked as the largest for credit unions for the seventh consecutive year. Received Forbes' Most Trusted Companies in America and Newsweek's Greatest Workplaces for Diversity awards.
Bano Platform Growth
Signed eighteen new clients to the Bano retail platform and thirty-three new Bano business deals in the quarter, with a 20% increase in registered users over the past twelve months.
Strong Cash Flow and Capital Allocation
Second-quarter operating cash flow was $90 million, with a trailing twelve-month free cash flow of $296 million.
Lowlights
Decline in Deconversion Revenue
Quarterly deconversion revenue of approximately $100,000 was down $5 million compared to the same period last year.
Hardware Revenue Decline
Hardware revenue was down $2 million for the quarter and $7 million year-to-date.
Increased Operating Expenses
SG&A expense increased 9% in the quarter, related to an increase in net personnel costs.
Potential Future Impact of Industry Consolidation
Indicators suggest increasing industry consolidation, which may have a greater impact in fiscal 2026.
Company Guidance
During Jack Henry & Associates, Inc.'s second quarter fiscal 2025 earnings call, the company reported a 6.1% increase in non-GAAP revenue, surpassing their prior guidance of 6%. They achieved a non-GAAP operating margin of 21.5%, slightly above expectations. The sales performance was robust with eleven competitive core wins, including institutions with over $1 billion in assets and a notable $7.5 billion asset win. The company set a record for sales in Q2 and closed thirteen deals to move existing clients to their private cloud. Client renewals were also strong, with twenty-eight core renewals in Q2, up 21% from the first half of the previous year. The company maintained a core retention rate of over 99% excluding M&A. Jack Henry & Associates, Inc. also signed fourteen new debit processing clients and two credit clients, and continued growth was observed in their Bano digital platform, with an increase in registered users to 13.2 million, a 20% rise over the past year. The company reiterated their fiscal 2025 full-year guidance, anticipating a strong second half driven by cloud growth, card volume increases, and new product installations.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.