Jack Henry & Associates (JKHY) AI Stock Analysis

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Jack Henry & Associates

(NASDAQ:JKHY)

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Outperform 77 (OpenAI - 5.2)

Rating:77Outperform

Price Target:

$177.00

▲(5.09% Upside)

Action:ReiteratedDate:02/07/26

The score is driven primarily by strong financial quality (high margins, strong free cash flow, and very low leverage) and a generally positive earnings-call outlook with raised guidance. These strengths are tempered by weaker near-term technical momentum and a valuation that looks somewhat premium versus the most recent top-line growth rate.

Positive Factors

Balance Sheet Strength

The company’s extremely low leverage and large equity base provide durable financial flexibility. With minimal debt, Jack Henry can sustain dividends and buybacks, fund cloud and product investments, and pursue selective M&A without stressing liquidity, improving resilience across business cycles.

Strong Cash Generation

High and improving free cash flow with strong cash conversion indicates earnings quality and funds reinvestment, R&D and shareholder returns. Reliable FCF supports product development (cloud, payments), strategic tuck-ins, and continued dividends/repurchases over the coming months.

Sticky Recurring Revenue & Market Share

High switching costs in core processing plus rising share and cross-sell of digital, card and private‑cloud services create durable recurring revenues. Private cloud clients generate materially higher revenue, improving lifetime value and structural revenue visibility versus one-off sales.

Negative Factors

Slowing Revenue Growth

Decelerating top‑line growth constrains the company’s ability to expand revenues organically. Given long sales and conversion cycles for core platforms, slower growth increases reliance on cross-sell, pricing and M&A to sustain returns, raising execution demands over the next several quarters.

Margin Headwinds

Investments and cost normalizations tied to cloud migrations, higher commissions and benefits create structural pressure on near‑term margins. These items are multi‑quarter in nature and require successful scale gains or efficiency initiatives to restore prior margin expansion trends.

Execution & Deconversion Risk

Large competitor consolidation increases potential wins but amplifies implementation, conversion and retention risk. Core migrations and deconversions can take many months, causing timing volatility and potential revenue churn; simultaneous new product rollouts add integration and execution complexity.

Jack Henry & Associates (JKHY) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$12.18B

Dividend Yield1.25%

Average Volume (3M)1.12M

Price to Earnings (P/E)26.5

Beta (1Y)0.12

Revenue Growth7.75%

EPS Growth20.42%

CountryUS

Employees7,170

SectorTechnology

Sector Strength88

IndustryInformation Technology Services

Share Statistics

EPS (TTM)1.72

Shares Outstanding72,167,366

10 Day Avg. Volume1,086,780

30 Day Avg. Volume1,123,330

Financial Highlights & Ratios

PEG Ratio1.51

Price to Book (P/B)6.18

Price to Sales (P/S)5.54

P/FCF Ratio22.38

Enterprise Value/Market Cap1.00

Enterprise Value/Revenue4.94

Enterprise Value/Gross Profit11.26

Enterprise Value/Ebitda13.98

Forecast

1Y Price Target

$205.00

Price Target Upside21.71% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering10

EPS Forecast (FY)6.7

Revenue Forecast (FY)$2.52B

Jack Henry & Associates Business Overview & Revenue Model

Company DescriptionJack 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.

How the Company Makes MoneyJack Henry & Associates generates revenue through multiple key streams. The majority of its revenue comes from the sale of software licenses and recurring maintenance fees associated with its core banking systems and complementary solutions. Additionally, the company earns significant income from its payment processing services, which include electronic funds transfer, ACH processing, and card processing services. Recurring revenue from these services is bolstered by long-term contracts with financial institutions. Partnerships with various fintech companies and integration with third-party applications also contribute to its revenue by expanding its service offerings and market reach. Overall, Jack Henry's business model leverages a combination of software sales, service fees, and strategic collaborations to create a steady flow of income.

Jack Henry & Associates Key Performance Indicators (KPIs)

Any

Revenue by Type

Revenue by Type
Shows how revenue is generated across different product or service lines, highlighting which areas are driving growth and which may need strategic adjustments.

Chart InsightsProcessing is the steady growth engine, with transaction revenue climbing consistently and underpinning recurring cash flow. Private and Public Cloud is accelerating as Jack Henry migrates larger clients (77% of core now on private cloud and recent migrations had 60% larger asset size), shifting revenue mix toward higher-margin recurring cloud services. On-prem support is seasonal and likely to shrink as migrations continue, while Product Delivery & Services remains lumpy, aided by acquisitions and conference-driven deals but exposed to pricing compression and M&A deconversion risks that could pressure renewals.

Data provided by:

The Fly

Jack Henry & Associates Earnings Call Summary

Earnings Call Date:Feb 03, 2026

(Q2-2026)

% Change Since: |

Next Earnings Date:May 12, 2026

Earnings Call Sentiment Positive

The earnings call conveyed broadly positive momentum: record quarterly revenue, substantial margin expansion, strong cash generation, raised guidance, meaningful core wins and accelerating product innovation (cloud, payments, SMB solutions, stablecoin testing). Management acknowledged near-term headwinds—deconversion activity, expected H2 normalization of benefits and some timing/one-time items—that will temper back-half results and add execution demands as competitor consolidation creates larger opportunities. On balance, the company demonstrated healthy fundamentals, improving returns and constructive capital allocation while noting manageable short-term pressures.

Q2-2026 Updates

Positive Updates

Record Quarterly Revenue and Margin Expansion

Non-GAAP revenue of $611 million, up 6.7% year-over-year; non-GAAP operating margin of 25.1%, representing 355 basis points of margin expansion versus prior-year Q2. GAAP and non-GAAP revenue grew ~8% year-to-date.

Strong Earnings and Cash Generation

Q2 GAAP diluted EPS of $1.72, up 29% year-over-year; first-half GAAP EPS $3.70, up 24% year-over-year. Q2 operating cash flow was $153 million (up $63 million YoY) and free cash flow $103 million (up $74 million YoY). Trailing 12-month non-GAAP ROIC was 23% versus 19% a year ago.

Raised and Tightened Full-Year Guidance

Updated full-year GAAP revenue growth guidance raised to 5.6%–6.3%; non-GAAP revenue growth guidance tightened and raised to 6.4%–7.1%. Non-GAAP margin expansion guidance increased to 50–75 basis points. GAAP EPS guidance raised to $6.61–$6.72 (6%–8% growth). Free cash flow conversion outlook 90%–100%.

Robust Core Sales and Market Share Gains

Core wins: 22 competitive core wins in the quarter (4 with >$1B asset institutions); 68% of new core wins included digital and card (vs. 45% in Q2 FY25). Over the past 8 years core market share among banks up 17% and credit unions up 40%; among >$1B institutions, bank share +32% and credit union share +12%.

Cloud & Private Cloud Migration Driving Higher-Value Revenue

Cloud revenue grew 8% and represents 33% of total revenue. 78% of core clients operate in the private cloud; private cloud clients generate ~2x average revenue compared with on-premise. Company secured 10 on-premise to private cloud contracts in the quarter (5 with >$1B institutions).

Payments and Faster Payments Momentum

Adoption of faster-payment channels increased materially: number of FIs using Zelle +22% YoY, RTP +26%, FedNow +32%; Q2 payment transaction volume through these channels increased 49% YoY, supporting processing revenue growth (processing is 44% of total revenue; processing revenue +9% GAAP, +8% non-GAAP).

Complementary & Digital Platform Traction

Complementary segment non-GAAP revenue +9% in Q2 with margin expansion; 48 new Financial Crimes Defender and Faster Payment module contracts in the quarter. Banno digital platform: 84 new clients signed in the quarter, 1,037 Banno retail clients, 435 live with Banno Business, and 15.2 million registered users (up 15% YoY).

Product Innovation and SMB Initiatives

Rolled out cloud-native Tap2Local merchant acquiring (300 clients live in Nov–Dec; additional 100 recently; targeting 100–150 installs per month) and Jack Henry Rapid Transfers (75 live, ~180 onboarding). Stablecoin proof-of-concept completed in 2 weeks; beta testing for USDC underway. Victor Technologies integration progressing to enable embedded payments and Banking-as-a-Service.

Capital Allocation and Shareholder Returns

Aggressive capital returns and balance-sheet discipline: $125 million in share repurchases YTD, $84 million in dividends paid in 2025, minimal debt and expected to exit the year debt-free (barring M&A). Continued appetite for repurchases while pursuing strategic M&A selectively (Victor acquisition example).

Negative Updates

Deconversion / M&A-Related Revenue Headwinds

Q2 deconversion revenue was approximately $6 million; company raised fiscal 2026 deconversion revenue guidance to $28 million. Management notes deconversion dollar amount has limited correlation to number of transactions but continues to reflect steady M&A activity.

Back-Half Growth and Margin Pressures Expected

Management expects lower non-GAAP revenue growth in H2 vs. H1 and projects some margin contraction in the back half due to normalization of self-insured medical costs, cloud migration infrastructure expenses and increased commissions; Q2 benefits cost tailwind is likely non-sustainable.

Payments Momentum May Moderate in H2

While payments growth was strong in H1, management expects slower payments momentum in the second half driven by seasonality, tougher comps and anticipated normalization (payments segment guidance notes H2 will be more challenging).

One-Time and Timing-Related Revenue Drivers

Some Q2 core revenue benefited from timing, convert/merge-related and one-time items that may not repeat in the back half, making short-term comparisons lumpy and emphasizing need to focus on full-year results rather than quarterly volatility.

Implementation / Rollout Still Early for Key SMB Products

New SMB products (Tap2Local, Rapid Transfers) are in early rollout: initial client counts are promising but management deferred detailed adoption metrics until the May earnings call, indicating outcomes and monetization are not yet fully proven at scale.

Competitive Environment and Execution Risk

Competitor core consolidation presents a large opportunity but also execution demands (sales, operations, conversion timing). Management acknowledged the pipeline is growing but core conversions can take many months to over a year, creating timing and execution risk to fully capture potential upside.

Company Guidance

The company raised and tightened its fiscal 2026 outlook: deconversion revenue guidance was increased to $28 million; full‑year GAAP revenue growth is now guided to 5.6%–6.3% while non‑GAAP revenue growth is guided to 6.4%–7.1%; non‑GAAP operating margin expansion is expected to be +50–75 basis points (noting Q2 non‑GAAP margin was 25% and YTD 26%); full‑year GAAP EPS is guided to $6.61–$6.72 (growth of ~6%–8%), with a GAAP tax rate estimate of 23.25%; free cash flow conversion is expected to be 90%–100% (bias to the higher end); Victor acquisition impacts will be excluded from non‑GAAP results, the company expects to exit the year debt‑free, and management cautioned the second half should show lower non‑GAAP revenue growth and some margin compression as medical benefits normalize and cloud migration, commissions and workforce timing pressures occur.

Jack Henry & Associates Financial Statement Overview

Summary

High-quality fundamentals supported by strong profitability (TTM net margin ~20.6%, EBIT margin ~26.7%), robust and improving free cash flow (~$654M TTM) with solid cash conversion, and a very conservative balance sheet (debt-to-equity ~0.01) alongside strong ROE (~23.8%). Main offset is decelerating TTM revenue growth (~1.9%) and some historical cash flow variability.

Income Statement

Very Positive

TTM (Trailing-Twelve-Months) revenue of ~$2.46B shows continued growth versus prior annual periods, but the growth rate has slowed to ~1.9% in the latest TTM. Profitability is a clear strength: gross margin is ~43.8% and net margin is ~20.6% in TTM, with operating profitability also solid (EBIT margin ~26.7%, EBITDA margin ~32.9%). Overall, the business is consistently profitable with stable-to-improving margins, offset by a decelerating top-line growth profile.

Balance Sheet

Very Positive

The balance sheet is very conservative. TTM total debt is only ~$20M against ~$2.20B of equity (debt-to-equity ~0.01), and several recent annual periods show effectively no debt, indicating substantial financial flexibility. Returns are strong (TTM return on equity ~23.8%), reflecting efficient use of capital. The main watch item is that strong returns can be harder to expand materially without faster growth, but leverage risk appears minimal.

Cash Flow

Very Positive

Cash generation is strong and improving: TTM operating cash flow is ~$708M and free cash flow is ~$654M, with free cash flow growth of ~9.8%. Cash conversion is healthy, with free cash flow running at ~92% of net income in TTM, suggesting earnings quality is solid. The key weakness is historical volatility—operating cash flow covered net income poorly in 2023 (below 1.0) before rebounding sharply in TTM (well above 1.0).

Breakdown	TTM	Jun 2025	Jun 2024	Jun 2023	Jun 2022	Jun 2021
Income Statement
Total Revenue	2.46B	2.38B	2.22B	2.08B	1.94B	1.76B
Gross Profit	1.08B	1.01B	916.07M	858.64M	814.27M	694.83M
EBITDA	870.78M	801.23M	714.31M	680.37M	652.27M	696.76M
Net Income	507.37M	455.75M	381.82M	366.65M	362.92M	311.47M
Balance Sheet
Total Assets	3.06B	3.04B	3.04B	2.92B	2.77B	2.46B
Cash, Cash Equivalents and Short-Term Investments	28.22M	101.95M	101.95M	38.28M	12.24M	48.79M
Total Debt	107.41M	0.00	0.00	150.00M	275.00M	115.13M
Total Liabilities	856.99M	913.14M	913.14M	1.08B	1.17B	1.07B
Stockholders Equity	2.20B	2.13B	2.13B	1.84B	1.61B	1.38B
Cash Flow
Free Cash Flow	654.23M	588.15M	509.92M	342.38M	469.97M	313.24M
Operating Cash Flow	708.22M	641.50M	568.04M	381.56M	504.63M	504.63M
Investing Cash Flow	-268.17M	-232.16M	-240.16M	-409.67M	-196.34M	-196.34M
Financing Cash Flow	-437.48M	-345.67M	-301.83M	-8.43M	-310.49M	-310.49M

Jack Henry & Associates Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price168.43

Price Trends

50DMA

176.22

Negative

100DMA

170.87

Negative

200DMA

169.59

Negative

Market Momentum

MACD

-3.33

Negative

RSI

51.71

Neutral

STOCH

91.64

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JKHY, the sentiment is Neutral. The current price of 168.43 is above the 20-day moving average (MA) of 163.85, below the 50-day MA of 176.22, and below the 200-day MA of 169.59, indicating a neutral trend. The MACD of -3.33 indicates Negative momentum. The RSI at 51.71 is Neutral, neither overbought nor oversold. The STOCH value of 91.64 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 "Finance & Corporate" 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 (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
JKHY	77 Outperform	$12.18B	26.50	24.28%	1.25%	7.75%	20.42%
EXLS	74 Outperform	$4.99B	27.23	27.25%	―	14.43%	29.86%
G	73 Outperform	$6.93B	14.72	22.32%	1.41%	7.40%	-14.45%
PAY	71 Outperform	$3.19B	61.03	12.80%	―	44.34%	45.96%
CACI	69 Neutral	$13.91B	23.70	13.18%	―	12.61%	11.85%
EPAM	69 Neutral	$7.62B	30.32	10.34%	―	14.26%	-15.49%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

* Technology Sector Average

Performance Comparison

JKHY

Jack Henry & Associates

167.05

-13.95

-7.71%

CACI

Caci International

612.52

253.56

70.64%

EPAM

Epam Systems

144.58

-52.69

-26.71%

EXLS

Exlservice Holdings

32.55

-14.21

-30.39%

Genpact

41.68

-8.57

-17.06%

PAY

Paymentus Holdings

25.49

-0.46

-1.77%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Feb 07, 2026