- If you are wondering whether Jack Henry & Associates is priced attractively at the moment, it helps to start by looking at how the recent share performance lines up with the underlying business value.
- The stock last closed at US$157.48, with returns of 0.2% over the past 7 days, a 6.7% decline over 30 days, an 11.7% decline year to date, and a 13.5% decline over the past year, compared with gains of 10.3% over 3 years and 7.8% over 5 years.
- Recent market attention around Jack Henry & Associates has focused on its role within the diversified financials space and how investors are reassessing companies that provide core technology and services to financial institutions. This shift in focus helps explain the mixed share price performance, as investors weigh long term franchise strength against shorter term sentiment.
- Simply Wall St currently assigns Jack Henry & Associates a valuation score of 3 out of 6. The rest of this article will walk through what that means using several common valuation approaches, and will then finish with a more holistic way to think about the stock's value.
Approach 1: Jack Henry & Associates Excess Returns Analysis
The Excess Returns model asks a simple question: are shareholders expected to earn more on their equity than the required return, and for how long? For Jack Henry & Associates, this starts with an estimated Book Value of $30.53 per share and a Stable EPS of $7.82 per share, based on weighted future Return on Equity estimates from 4 analysts.
The model assumes a Cost of Equity of $2.53 per share. That implies an Excess Return of $5.29 per share, meaning the projected earnings are above the required shareholder return. This is consistent with an Average Return on Equity of 22.21% and a Stable Book Value of $35.21 per share, which is based on estimates from 2 analysts.
By capitalising these expected excess returns, the model arrives at an intrinsic value of about $175.68 per share. Compared with the recent share price of $157.48, this implies the stock is around 10.4% undervalued on this method.
Result: UNDERVALUED
Our Excess Returns analysis suggests Jack Henry & Associates is undervalued by 10.4%. Track this in your watchlist or portfolio, or discover 62 more high quality undervalued stocks.
Approach 2: Jack Henry & Associates Price vs Earnings
For a profitable business like Jack Henry & Associates, the P/E ratio is a useful way to think about value because it links what you pay today to the earnings the company is already generating. Higher growth expectations or lower perceived risk often justify a higher P/E, while slower expected growth or higher risk usually point to a lower, more conservative P/E range.
Jack Henry & Associates currently trades on a P/E of 22.40x. That sits above the Diversified Financial industry average P/E of 15.39x, but below the peer group average of 25.22x. Simply Wall St’s “Fair Ratio” for the company is 12.32x. This Fair Ratio is a proprietary estimate of what a reasonable P/E could be, given factors such as earnings growth, industry, profit margins, market cap and company specific risks.
Because the Fair Ratio brings these fundamentals together in one metric, it can be more informative than a simple comparison with peers or the broad industry, which might have very different growth, risk or profitability profiles. Comparing 22.40x with the Fair Ratio of 12.32x suggests Jack Henry & Associates trades above this model based assessment of fair value.
Result: OVERVALUED
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Upgrade Your Decision Making: Choose your Jack Henry & Associates Narrative
Earlier there was mention of an even better way to understand valuation. Think of a Narrative as your own clear story for Jack Henry & Associates that links what you believe about its future revenue, earnings and margins to a financial forecast, a Fair Value, and then a simple comparison with the current share price. All of this is available within an easy Community tool on Simply Wall St that millions of investors use. Narratives refresh automatically when new news or earnings arrive. One investor might build a Narrative that leans into the 2029 analyst assumptions, the US$203.21 Fair Value and a stronger view on cloud, digital and compliance solutions. Another might focus on the risks around bank consolidation, pricing pressure and fintech competition, and set a lower Fair Value. Each can then see at a glance whether the current US$157.48 price sits above or below their own view of what the shares are worth.
Do you think there's more to the story for Jack Henry & Associates? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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