JACK HENRY & ASSOCIATES, INC. (JKHY): what the price assumes

In the published model solve dated 2026-Q2, anchored at $169.73, JACK HENRY & ASSOCIATES, INC. (JKHY) is priced for +9.5% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.

Generated: 2026-08-30 · Exported: 2026-08-31 · Source: https://boothcheck.com/report/JKHY

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 8.6% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.2%); the inversion above states its own rate.

Per-Model Detail (n=15)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Jack Henry sells the core processing systems that run roughly 7,500 community and regional banks and credit unions, a business where the contract is the moat: clients sign multi-year outsourced data-processing deals and the cost of ripping out the system that runs every account and transaction is high enough that they rarely leave.
• The clearest risk is concentration in one vertical, since the company states it derives most of its revenue from the financial services industry, so a wave of bank consolidation or a worsening credit cycle removes clients directly rather than gradually.
• Watch the fourth fiscal quarter, where management has flagged slower non-GAAP revenue growth and margin contraction from a digital-revenue slowdown and card-revenue pressure, the first soft print after a record run of competitive core wins.

Bull Case

Start with what management does with the cash, because for a business this steady that decision is the whole story. Jack Henry throws off more free cash flow than it needs to run itself, generating $727.6M against a business that requires little capital to grow, and it returns that cash on two channels: a dividend yielding near 2% and a share count that has been shrinking, down about 0.4% a year. There is no debt problem to solve first, net debt sits at roughly $69M against trailing operating income of $654M, so essentially every dollar of cash is discretionary. Management spends it the way a business with a durable franchise should: reinvesting in cloud migration and buying back stock rather than chasing acquisitions to paper over weak organic growth.

The franchise that generates that cash is one of the stickier ones in software. Jack Henry runs the core systems for community and regional financial institutions, and the revenue is overwhelmingly recurring. The company describes generating revenue from "data processing, transaction processing, software licensing" under multi-year outsourced contracts, the kind of arrangement where the client has wired its entire deposit, lending, and card operation into the vendor's plumbing. Switching cores is one of the highest-risk projects a bank can undertake, which is why retention runs high and why the company can grow Core cloud revenue organically: the FY2025 10-K attributes a Core segment cost-of-revenue increase to "increased direct costs associated with the organic growth in cloud revenue", the signature of clients migrating to higher-value hosted delivery rather than churning out.

The momentum behind that base is real and recent. The company secured 17 competitive core wins in its fiscal third quarter, including five institutions over $1B in assets, which it called its best Q3 for new core wins in seven years. Each core win is a multi-year annuity that compounds: the bank that signs for processing then buys digital banking, payments, and fraud tools on top. GAAP revenue grew 8.7% to $636.2M in that quarter and GAAP EPS rose 12.2% to $1.71, with management raising full-year GAAP EPS guidance to a $6.78 to $6.87 range. A business growing high-single-digit revenue, expanding earnings faster than revenue, and converting nearly all of it to cash is doing the unglamorous things that compound.

Bear Case

The advantage that makes Jack Henry safe is also the advantage most exposed to slow erosion. Its moat is the cost and risk of switching a bank's core system, but that moat protects a shrinking field of customers. The company states plainly that it derives "most of our revenue from products and services we provide to the financial services industry", and the number of US community banks and credit unions, its addressable client base, has been consolidating for years. Every merger that combines two of Jack Henry's clients onto one core, or moves one onto a larger acquirer's competing system, removes a recurring-revenue annuity. The switching-cost moat keeps existing clients in place; it does nothing to replace clients that disappear into mergers.

The second pressure is on price, not retention. Jack Henry's contracts come up for renewal, and the company concedes that to win or keep business it "may need to lower prices or offer other terms that negatively impact our results of operations in order to successfully compete", and that failure to achieve favorable renewals could negatively affect the business. That is the quiet way a sticky franchise degrades: not a mass exodus, but each renewal cycle conceding a little more on price to fend off larger competitors and newer fintech-native platforms targeting the same institutions. The near-term confirmation is in management's own guidance, which flags fourth-quarter margin contraction from a digital-revenue slowdown and card-revenue pressure, the first visible crack in an otherwise clean growth record.

Then there is what the price asks. At roughly 14 times company-wide operating income, the market is paying for the business to keep compounding operating profit, and while that near-term pace sits within what the company has recently delivered, the durability is the bet, not the rate. The valuation methods that lean on earnings power and peer multiples support the price, but the asset-based lens, book value plus the returns earned above the cost of capital, lands well below it, with the most conservative book-anchored reads near $69 to $78 against a $126 price (June 27, 2026). That gap is the warning: pay this multiple and a buyer is underwriting that the consolidation drag never overwhelms the cross-sell engine, in a customer base that structurally gets smaller every year.

Valuation

What the price assumes here is modest, which is itself the point. At about 14 times company-wide operating income, the market is asking for roughly 2.3% annual operating growth sustained over five years, a pace the company has comfortably exceeded recently. The bet is not on the rate; it is on how long the steady compounding lasts. Against the sector, that puts Jack Henry in the lower half of the peer-multiple range, so this is not priced as a growth story.

The methods split along a clean line. Earnings-power, peer-multiple, and cash-flow-growth models land at or above today's price, while the asset-value lens, which anchors on book value and the excess returns earned over the cost of capital, reads the price as expensive. That pattern describes a value-and-earnings supported name rather than a growth bet: the price is defensible on what the business earns and on what comparable software-and-services firms fetch, and it looks rich only when measured against accounting book value, a weak yardstick for an asset-light franchise whose value lives in client relationships rather than on the balance sheet. The DCF methods reach the price by holding today's cash-flow trajectory; the relative-valuation method anchors to a sector P/E near 35x against Jack Henry's lower earnings multiple, which is why peer comparison reads it as inexpensive.

The balance sheet carries none of the downside risk. Net debt of roughly $69M against $654M of trailing operating income is trivial leverage, the share count is slowly shrinking, and free cash flow of $727.6M covers the dividend several times over. The reported operating margin sits near 26%. The vulnerability in this name is not solvency or valuation arithmetic; it is the slow demographics of its customer base, which the price does not obviously discount.

Catalysts

The most recent print set the tone. Jack Henry reported fiscal third-quarter GAAP revenue of $636.2M, up 8.7%, and GAAP EPS of $1.71, up 12.2%, with net income up 10.6% to $122.9M. Alongside it the company raised full-year GAAP EPS guidance to $6.78 to $6.87 and set GAAP revenue guidance of $2,521M to $2,533M. The operational headline was the sales engine: 17 competitive core wins in the quarter, five of them institutions above $1B in assets, described as the best fiscal third quarter for new core wins in seven years.

The near-term watch item is the fourth fiscal quarter, where management guided to slower non-GAAP revenue growth and margin contraction, citing a digital-revenue slowdown, card-revenue pressure, and higher expenses. That makes the next print the test of whether the soft quarter is a one-time timing effect or the start of a slower growth phase. The longer-running theme is the cloud migration of the existing client base and the company's deployment of internal AI tooling, with nearly 100 AI tools approved for internal use across more than 500 use cases, an efficiency lever that bears on the margin question the fourth quarter raises.

Peer Cohorts (Per Segment, With Filing Citations)

Core (reported)

• FIS (Fidelity National Information Services, Inc.)
• FY2025 10-K: …a set of modern digital solutions to support all customer types, including retail consumers, sole proprietors, small businesses and large corporations, through any channel, including desktop, tablet, smartphone, and branch. The uniform customer experience extends to support a broad range of financial services…
• FY2025 10-K: , transfer agency and client reporting. Our solutions improve both investment decision making and operational efficiency, while managing risk and increasing transparency across the industry. • Lending . Our lending solutions offer full life-cycle commercial lending functionality from loan origination, commercial…
• FISV (FISERV INC)
• FY2025 10-K: …service providers, retailers and consumer finance companies, to enable them to process credit card transactions on behalf of their customers. Depending on the needs of our client, we deliver these solutions through our proprietary processing platforms, software application licenses, or SaaS hosted in the cloud. Our…
• FY2025 10-K: …when management evaluates segment performance, such as gains or losses on sales of businesses, certain assets or investments; costs associated with acquisition and divestiture activity; certain services revenue associated with various dispositions; expenses associated with the Company's transformation initiative…
• ACIW (ACI WORLDWIDE, INC.)
• FY2025 10-K: …with new regulations or processing mandates. We partner with computer hardware and software manufacturers, such as HPE, IBM, Microsoft Corporation, and Oracle, to ensure compatibility with new operating system releases and generations of hardware. Customers often provide additional information on requirements and…
• FY2025 10-K: …volumes through the licensing of payment technologies to banks and intermediaries seeking to take advantage of that growth, supporting 44 global payment schemes and providing the central infrastructure to 11 central banks directly operating the scheme using ACI software. With the launch of ACI Connetic, our…
• NCNO (nCino, Inc.)
• FY2025 10-K: …through our business development managers, account executives, field sales engineers, and customer success managers. Our sales efforts in the U.S. are organized around FIs based on size, whereas 35 Table of Contents internationally, we focus our sales efforts by geography. As of January 31, 2025, we had 194 sales and…
• FY2025 10-K: …implement our new pricing model; i Table of Contents • our ability to add capacity and automation to our operations and solutions, including artificial intelligence ("AI"); • our ability to attract and retain key personnel; • our ability to successfully integrate and realize the benefits from acquisitions and other…
• QTWO (Q2 Holdings, Inc.)
• FY2025 10-K: …for both account holders and borrowers; • breadth and depth of product portfolio addressing numerous mission critical applications for our customers; • full-feature functionality across digital channels; • ability to integrate targeted offers for End Users across digital channels; • ability to support financial…
• FY2025 10-K: …are competitive, and pricing pressure, new technologies or other competitive dynamics could adversely affect our business and operating results. We currently compete with providers of technology and services in the financial services industry, including point system vendors, core processing vendors and systems…

Payments (reported)

• FISV (FISERV INC)
• FY2025 10-K: …to accelerate the deployment of our Clover POS and business management platform across Europe. On March 2, 2025, we acquired Payfare, Inc. ("Payfare"), a provider of program management solutions powering instant access to earnings and banking solutions for workforces. Payfare is included within the Financial segment…
• FY2025 10-K: …provide consultative engagement to enhance community banks' and credit unions' strategic investments. On September 4, 2025, the Company acquired CardFree Inc. ("CardFree"), an all-in-one platform delivering integrated order, payment and loyalty solutions for merchants. CardFree is included within the Merchant segment…
• FIS (Fidelity National Information Services, Inc.)
• FY2025 10-K: …(g) Contract Related Balances The payment terms and conditions in our customer contracts may vary. In some cases, customers pay in advance of our delivery of solutions or services; in other cases, payment is due as services are performed or in arrears following the delivery of the solutions or services. Differences…
• FY2025 10-K: …requires judgment and may affect the timing and amount of revenue recognized. To determine the standalone selling price of its promised solutions or services, the Company conducts a regular analysis to determine whether various solutions or services have an observable standalone selling price. If the Company does not…
• GPN (GLOBAL PAYMENTS INC.)
• FY2025 10-K: …ASC 606, we recognize revenue when a customer obtains control of promised goods and services. The amount of revenue recognized reflects the consideration to which we expect to be entitled to receive in exchange for these goods and services. Merchant Solutions. Our customers in the Merchant Solutions segment contract…
• FY2025 10-K: …in our consolidated balance sheets. Other Issuer Solutions customer arrangements provide business-to-business ("B2B") payment services, consisting of a stand-ready obligation to process financial transactions for which revenue is recognized on a daily basis based on the services that are performed on that day.…
• FOUR (SHIFT4 PAYMENTS, INC.)
• FY2025 10-K: …goods or services is transferred to its customers. The Company provides its merchants with an end-to-end payments offering that combines its payments platform, including its proprietary gateway and breadth of software integrations, and its suite of technology solutions. The Company primarily earns revenue through…
• FY2025 10-K: …all periods presented. Accounts Receivable Accounts receivable are primarily comprised of amounts due from the Company's customers. Most receivables are typically received within ten business days following the end of the month. In addition, accounts receivable includes amounts due from merchants for point-of-sale…
• ACIW (ACI WORLDWIDE, INC.)
• FY2025 10-K: …by the end of the day, resulting in a settlement deposit on the Company's books and (2) disburse funds to its clients in advance of receiving funds from the credit or debit card processor, resulting in a net settlement receivable position. 57 Table of Contents Off Balance Sheet Settlement Accounts The Company also…
• FY2025 10-K: …resource costs related to developing and documenting our product requirements. Assets are not allocated to segments, and the Company's CODM does not evaluate operating segments using discrete asset information. 76 The following is revenue by primary solution category for the Company's reportable segments for the…
• EVTC (EVERTEC, Inc.)
• FY2025 10-K: …gains recorded in the current year from the benefit of tax credits. Segment Results of Operations The Company has four operating and reportable segments: Payment Services - Puerto Rico & Caribbean, Latin America Payments and Solutions, Merchant Acquiring, and Business Solutions based upon organization of the Company…
• FY2025 10-K: …customers who seek to deploy them across their own businesses. For our processing services, revenues are primarily driven by the number of transactions processed and the number of accounts on file / system (card accounts in the case of Issuers, merchant accounts in the case of Acquirers). These services provide our…
• PAY (Paymentus Holdings, Inc.)
• FY2025 10-K: …countries as their functional currency. Assets and liabilities are translated using the exchange rates at the balance sheet date. Revenue and expenses are translated at average exchange rates during the period. Equity transactions are translated using historical exchange rates. The effects of foreign currency…
• FY2025 10-K: …fee, or (ii) from financial institutions. Transaction fees are collected for each completed transaction processed through the platform. The Company's payment transaction processing revenue was $1,187 million for the year-ended December 31, 2025. The principal consideration for our determination that performing…

Complementary (reported)

• NCNO (nCino, Inc.)
• FY2025 10-K: …or selling any elements of our solutions that rely on technology that is alleged to infringe or misappropriate the intellectual property of others; • enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies or intellectual property rights; • expend…
• FY2025 10-K: …continues to collect information and reevaluates these estimates and assumptions quarterly and records any adjustments to the Company's preliminary estimates to goodwill provided that the Company is within the measurement period. Upon the conclusion of the measurement period or final determination of the fair value…
• QTWO (Q2 Holdings, Inc.)
• FY2025 10-K: …initiation, configuration, application testing, limited production and production. We offer customized professional services to assist our customers with their efforts to extend our offerings and differentiate their digital brands. We engage with select established customers for more tailored, premium professional…
• FY2025 10-K: …revenue recognized in the last month of the reporting period, with the exception of variable revenue in excess of contracted amounts for which we instead take the average monthly run rate of the trailing three months within that reporting period. Our Total ARR also includes the contracted minimums associated with all…
• ALKT (ALKAMI TECHNOLOGY, INC.)
• FY2025 10-K: …changes in our business; • diluting the interests of our existing stockholders as a result of issuing shares of our common stock upon conversion of the 2030 Convertible Notes; and • placing us at a possible competitive disadvantage with competitors that are less leveraged than us or have better access to capital. Our…
• FY2025 10-K: …alk:ThirdAmendmentMember us-gaap:DebtInstrumentRedemptionPeriodOneMember srt:MinimumMember us-gaap:LineOfCreditMember 2025-02-27 2025-02-27 0001529274 us-gaap:RevolvingCreditFacilityMember alk:ThirdAmendmentMember us-gaap:DebtInstrumentRedemptionPeriodOneMember srt:MaximumMember us-gaap:LineOfCreditMember 2025-02-27…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.