Jack Henry & Associates, Inc. (JKHY) DCF Valuation & Fundamental Primer
Jack Henry & Associates, Inc. (JKHY) currently trades at $181.46 with an enterprise value of $10.04B. Our proprietary institutional model rates Jack Henry & Associates, Inc. at 77/100 (Grade: A · High-Quality Compounder). The current market price prices in an implied 5-year revenue CAGR of 14.4% vs. historical growth of 7.8% (Fairly Priced to Fundamentals).
Institutional fundamental teardown of Jack Henry & Associates, Inc. (JKHY) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
Jack Henry & Associates, Inc. (JKHY) 3-Scenario DCF Valuation Range
Stress-test JKHY's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $181.46).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $154.60 -15% | $163.93 -10% | $174.83 -4% | $187.70 +3% | $203.14 +12% |
| 9.3% | $139.33 -23% | $146.69 -19% | $155.13 -15% | $164.93 -9% | $176.42 -3% |
| 10.0% | $126.77 -30% | $132.68 -27% | $139.39 -23% | $147.04 -19% | $155.88 -14% |
| 10.8% | $116.26 -36% | $121.09 -33% | $126.51 -30% | $132.63 -27% | $139.60 -23% |
| 11.5% | $107.33 -41% | $111.34 -39% | $115.79 -36% | $120.77 -33% | $126.37 -30% |
Institutional Software Quality Scorecard (77/100 · Grade A)
Strong fundamentals, above-average cash generation, and robust competitive positioning.
Strong cash conversion; 100%+ of operating profit turns into free cash
Minimal dilution friction; management compensation aligned with shareholders
Sub-par gross margins; higher cost of delivery or hardware/services mix
Positive net cash cushion; self-funding operations with zero insolvency risk
Core Investment Strengths & Moats
- High cash conversion: 100%+ of operating income converted to free cash flow
- Low dilution friction: SBC is only 1.2% of revenue
- Net cash positive: $102.0M balance sheet buffer
Key Operational & Dilution Risks
- Lower software gross margins (42.7%), indicating higher hosting or service delivery drag
Reverse-DCF Solver: What Growth is Priced Into JKHY?
Market implies 14.4% annual revenue growth over next 5 years (15.2% dilution-adjusted), in line with company run-rate.
Headline Reverse-DCF ignores Stock-Based Compensation (1.2% of revenue) and annual share dilution (0.1%/yr). Accounting for both requires 15.2% 5-year revenue CAGR to justify $181.46/sh on a true per-share economic cash flow basis.
Jack Henry & Associates, Inc. (JKHY) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $2.38B | $2.38B | $2.56B | $2.76B | $2.98B | $3.21B | $3.46B |
| Gross Profit | $1.01B | $1.01B | $1.09B | $1.18B | $1.27B | $1.37B | $1.48B |
| Operating Income (EBIT) | $568.7M | $568.6M | $613.1M | $660.9M | $712.6M | $768.2M | $828.2M |
| Stock-Based Compensation (SBC) | $28.4M | $28.5M | $30.7M | $33.1M | $35.7M | $38.5M | $41.5M |
| Unlevered Free Cash Flow (FCF) | $588.1M | $588.1M | $634.1M | $683.6M | $737.0M | $794.5M | $856.6M |
| SBC-Adjusted True Cash Flow | $559.8M | $559.6M | $603.3M | $650.4M | $701.2M | $756.0M | $815.1M |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -15.2 + 0.54 × (Rule of 40) · R² = 69%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| Jack Henry & Associates, Inc. | JKHY | $13.22B | $2.38B | 42.7% | 24.8% | 32.6% | 1.2% | 5.5× |
| ServiceNow | NOW | $152.61B | $10.98B | 79.2% | 31.1% | 54.2% | 15.9% | 13.9× |
| Workday, Inc. | WDAY | $50.35B | $8.00B | 75.0% | 27.4% | 43.9% | 19.0% | 6.4× |
| Salesforce | CRM | $217.10B | $37.90B | 77.2% | 32.8% | 42.8% | 8.4% | 5.8× |
| Datadog | DDOG | $46.05B | $2.68B | 80.8% | 31.1% | 57.7% | 21.3% | 17.4× |
| Snowflake Inc. | SNOW | $71.79B | $3.63B | 66.5% | 25.2% | 57.7% | 40.8% | 20.0× |
| Hubspot | HUBS | $19.89B | $2.63B | 85.0% | 21.3% | 52.7% | 19.2% | 7.7× |
| Peer Cohort Median Benchmark (N=6) | 78.2% | 29.2% | 53.5% | 19.1% | 10.8× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 5.5× | $13.11B | $13.22B | $181.46 | 0.0% |
| -20% Multiple Compression | 4.4× | $10.49B | $10.59B | $145.45 | -20.0% |
| -35% Multiple Compression | 3.6× | $8.52B | $8.63B | $118.44 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $11.88B | $11.98B | $164.46 | -9.4% |
Frequently Asked Questions: Jack Henry & Associates, Inc. (JKHY) Valuation
What is Jack Henry & Associates, Inc. (JKHY)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, Jack Henry & Associates, Inc. (JKHY) has a Base Case implied value of $139.22 per share (with a Bear Case of $77.09 and a Bull Case of $211.31), compared to its current price of $181.46. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Jack Henry & Associates, Inc. (JKHY)'s Rule of 40 score and Free Cash Flow margin?
Jack Henry & Associates, Inc. achieves a Rule of 40 score of 32.6%, combining a 7.8% revenue growth run-rate with a 24.8% TTM free cash flow margin on $2.38B in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.
What revenue growth rate is priced into JKHY stock according to Reverse-DCF analysis?
At $181.46 per share (Enterprise Value of $13.11B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 14.4%, compared to Jack Henry & Associates, Inc.'s historical CAGR of 7.8%. Overall market expectations are rated as "Fairly Priced to Fundamentals".
How does Jack Henry & Associates, Inc. compare to Software & Cloud Services software peers?
Jack Henry & Associates, Inc. (JKHY) earns an institutional Software Quality Score of 77/100 (Grade A — High-Quality Compounder). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.
How does Stock-Based Compensation (SBC) impact Jack Henry & Associates, Inc. (JKHY)'s valuation?
Jack Henry & Associates, Inc. recorded $28.4M in TTM stock-based compensation (1.2% of revenue). When treating SBC as a cash-equivalent compensation expense, Jack Henry & Associates, Inc.'s SBC-adjusted free cash flow yield is 4.2%, scoring 25/25 on our Shareholder Dilution Friction pillar.