JKHY Stock Study (5-30-26)

Posted by Mark on June 19, 2026 at 07:23 | Last modified: May 30, 2026 07:47

I recently did a stock study on Jack Henry & Associates, Inc. (JKHY, $136.32).

M* writes:

     > Jack Henry is a leading provider of core processing and
     > complementary services, including electronic funds transfer,
     > payment processing, and loan processing, for US banks and
     > credit unions, with a focus on small and midsize banks. Jack
     > Henry serves almost 1,000 banks and over 700 credit unions.

Over the past decade, this medium-size company grows sales and EPS at annualized rates of 6.5% and 6.9%, respectively (FY ends Jun 30). Lines are mostly up, straight, and parallel except for an EPS decline in 2019 (likely TCJA). Ten-year EPS R^2 is 0.76 and Value Line (VL) gives an Earnings Predictability score of 95. Shares outstanding decrease 8.4% (1.0%/year).

Over the past decade, PTPM leads peer and industry averages while ranging from 22.4% in ’19 to 26.6% in ’16 with a last-5-year mean of 23.4%. ROE leads peer and industry averages while ranging from 19.0% in ’19 to 30.6% in ’18 with a last-5-year mean of 23.6% (shareholder equity consistently positive with 8.8% CAGR). Debt-to-Capital is much lower than peer and industry averages with a last-5-year mean of 7.4% (and zero in the most recent year).

Quick ratio is 0.9 and interest coverage 123 per M* who assigns “Wide” Economic Moat, “Exemplary” rating for Capital Allocation, and an A grade for Financial Health (per BetterInvesting® website). VL gives an A+ grade for Financial Strength.

With regard to sales growth:

• YF gives YOY ACE 6.5% and 6.0% for ’26 and ’27, respectively (based on 15 analysts).
• Zacks gives YOY ACE 6.4% and 6.0% for ’26 and ’27 (6 analysts).
• VL projects 6.1% per year from ’25-’30.
• CFRA projects 6.5% YOY and 6.2% per year for ’26 and ’25-’27, respectively.
• M* gives 2-year ACE of 6.3% per year and projects 5-year CAGR 6.6% in Equity Report.

My 5.0% per year forecast is below the range.

With regard to EPS growth:

• MarketWatch gives ACE 6.8% and 7.7% per year for ’25-’27 and ’25-’28, respectively (based on 18 analysts).
• Nasdaq.com gives ACE 5.9% and 7.6% per year for ’26-’28 and ’26-’29 [6 / 5 / 1 analyst(s) for ’26 / ’28 / ’29].
• Seeking Alpha projects 4-year CAGR of 10.0%.
• Finviz gives 5-year annualized ACE of 8.1% (13).
• YF gives YOY ACE 9.7% and 8.3% for ’26 and ’27, respectively (8).
• Zacks gives YOY ACE 8.5% and 4.1% for ’26 and ’27 (6) along with 5-year CAGR of 10.0%.
• VL projects 7.4% per year from ’25-’30.
• CFRA projects 9.6% YOY and 7.3% per year for ’26 and ’25-’27 along with 3-year CAGR of 11.0%.
• M* gives ACE CAGR 10.2% and projects 5-year CAGR of 10.2% (lower of GAAP and adjusted) in Equity Report.

My 7.0% forecast is below the long-term-estimate range (mean of six: 9.3%). Initial value is ’25 EPS of $6.24/share rather than 2026 Q3 EPS of $7.15 (TTM).

My Forecast High P/E is 28.0. Over the past 10 years, high P/E ranges from 27.5 in ’18 to 50.5 in ’20 with a last-5-year mean of 39.6 and last-5-year-mean average P/E of 34.2. I am near bottom of the range (only ’18 is less).

My Forecast Low P/E is 17.0. Over the past 10 years, low P/E ranges from 20.2 in ’18 to 34.4 in ’21 with a last-5-year mean of 28.7. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) of $106.10 is default based on initial value from above: 22.2% less than previous close and 19.9% less than the 52-week low.

Over the past decade, Payout Ratio (PR) ranges from 20.8% in ’18 to 43.8% in ’19 with a last-5-year mean of 39.8%. I am forecasting below the range at 20.0%.

These inputs land JKHY in the BUY zone with a U/D ratio of 3.6. Total Annualized Return (TAR) is 13.2%.

PAR (using Forecast Average—not High—P/E) of 8.5% is less than I seek for a medium-size company. If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR instead.

To assess MOS, I start by comparing my inputs with those of Member Sentiment (MS). Based on 46 studies done in the past 90 days (10 outliers including my study excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and PR are 6.0%, 6.2%, 31.0, 22.9, and 39.4%, respectively. I am lower except for EPS growth. VL projects a future average P/E of 28.0 that is greater than MS (27.0) and much greater than mine (22.5).

MS high / low EPS are $9.31 / $6.65 versus my $10.03 / $6.24 (per share). My high EPS is greater due to a [surprisingly] higher growth rate. VL (M*) high EPS of $8.50 ($10.22) is less than both (in the middle).

MS LSPF of $126.50 implies a Forecast Low P/E of 19.0: less than the above-stated 22.9. MS LSPF is 16.9% less than the default $6.65/share * 22.9 = $152.29 resulting in more conservative zoning. MS LSPF exceeds mine by 20.4%, though.

MOS is robust in the study because most of my inputs are near or less than historical/analyst/MS averages/ranges. MS TAR exceeding mine by 3.7% supports the assessment along with my substantially lower LSPF.

With regard to valuation, PEG is 2.0 and 2.5 per Zacks and my projected P/E: slightly overvalued (M* has 1.5). Relative Value [(current P/E) / 5-year-mean average P/E] is quite low at 0.56. “Quick and Dirty” DCF method has stock undervalued by 14% while M* (CFRA) reports the stock at a 28% (7%) discount.

Per U/D, JKHY is a BUY under $140/share. BetterInvesting® TAR criterion is met [245 / ((14.17 / 100 ) +1 ) ^ 5] ~ $126 given a forecast high price of $245.

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