Jack Henry & Associates JKHY
Technology · Information Technology Services · Synthos Deep Dive · 2026-07-03
The Overview
Jack Henry is the company that runs the behind-the-scenes technology for small and mid-size banks and credit unions — the "core" software that tracks your deposits, loans and account balances, plus the systems that move payments and power mobile banking apps. Thousands of community banks rent this software year after year, and almost none of them ever leave (retention is above 99%). It is a boring, sticky, reliable business.
The catch: it grows slowly — earnings rise roughly 8% a year — yet the stock still costs about $20 for every $1 of annual profit, which is a full price for that pace. The stock has actually fallen about 19% over the past year, and by one common momentum gauge it looks stretched (overbought) right now. So the quality is real, but you're not being handed a bargain.
Our verdict is Watch: a great company, wait for a cheaper price.
Here's what our three scores mean in everyday terms:
- Downside Risk 4/10 (fairly safe). No debt (it has more cash than debt), a low-swing stock, and customers who never leave — but the full price and a stretched chart add some risk.
- Growth Quality 6/10 (good, not great). Very profitable and durable, but it grows slowly.
- Exponential Potential 3/10 (low). It won't double quickly — it's a steady compounder in a mature market, not a rocket.
The one big worry: you're paying a premium multiple for high-single-digit growth. If the multiple slips back toward its history, the stock can go sideways-to-down even while the business does fine.
Putting a number on it: our fair-value estimate is $158 against a current price of $169.73 — consistent with our call to stay away or wait for a better setup.
Our summary metrics
Net-cash balance sheet & 0.58 beta, but 20.5× trailing on ~8% EPS growth and RSI 77 leaves the entry stretched.
High-single-digit forward EPS CAGR, 44% gross / 35% EBITDA margin, 24% ROE, >99% retention — durable but not fast.
Decelerating high-single-digit grower at a $10B cap in a saturated US bank-tech niche — a compounder, not an exponential.
What does “fair value” mean?
Fair value is Synthos’s estimate of what one share is worth today, based on our model of the company’s future cash generation and the risks to it. It is not a price target or a prediction of where the stock trades next quarter — it’s the price where we think risk and reward are balanced. Above it, you’re paying for outcomes better than our base case; below it, the market is offering a margin of safety.
The model’s inputs and weightings are proprietary — they’re the product. What we publish is the output, plus an independent, public-math cross-check further down the page (“Check our number”) so you can judge it for yourself.
What do the 5 tiers mean? (Core · Tactical · Watch · Hold · Avoid)
Exponential Potential
Decelerating high-single-digit grower at a $10B cap in a saturated US bank-tech niche — a compounder, not an exponential.
What could take this further than the base case — and where the market may be underpricing it. Full forward-growth and acceleration math in Deeper analysis, §4 below.
Deeper analysis
Technicals, fundamentals, valuation, and the full expert-claim evidence panel — the detail behind the numbers above.
Reference table
| Street consensus | $186.88 (high $216 / low $165; 12 Buy · 10 Hold · 0 Sell) — context, not our anchor |
| Valuation | 20.5× trailing EPS · 21× FY26E · 20× FY27E · 19× FY28E · EV/S 4.2× · EV/EBITDA 11.8× |
| Technicals | Mixed — $147, −24% off 52-wk high, above 50-DMA / below 200-DMA, RSI 77 (overbought), −19% 12-mo (SPY +21%) |
| Conviction | Low — 1 net-bullish voice, +0.85 net, 7 reconciled claims (one bull + one valuation caution) |
| Position sizing | Watch-list; a 1–3% starter only on a pullback / RSI reset |
What the experts actually said 7 traceable claims on JKHY · showing the highest-conviction voices
“Best-in-class outsourced tech provider to small/midsize banks; customer-first culture drives >99% retention and structural quality edge.”
“Great business but stock roughly flat over past 5 years after compounding ~480x since 1980s IPO; business dynamics diverge from recent stock dynamics.”
Every claim reconciles to a real claim_id in the Synthos knowledge base — this is the evidence the verdict is built on, not vibes. Management (the company itself) is shown but half-weighted; one cautionary voice is included on purpose.
Price & moving averages 12 months · 50 & 200-day averages · 52-week range
Solid line = price · dashed line = 50-day average · dotted line = 200-day average · the two thin horizontal lines mark the 52-week high and low. Price above both averages is an uptrend.
Data summary: last close $169.73, 12% above the 50-day average ($151), 6% above the 200-day average ($160) — an uptrend. 12% below the 52-week high of $193, 38% above the 52-week low of $123.
Bollinger Bands 20-day average ± 2 standard deviations
The shaded band widens when the stock gets more volatile. Riding the upper edge = strong momentum (sometimes stretched); the lower edge = weak / potentially oversold.
Data summary: price $169.73 is currently inside the band (band $145–$175).
RSI (14) momentum gauge · 0–100
Above 70 (overbought zone, shaded) = overbought, below 30 (oversold zone, shaded) = oversold. Currently 65.
MACD 12 / 26 / 9 · trend & momentum
The MACD line crossing above the signal line (bars flip to the up color) = momentum turning up; crossing below (bars flip to the down color) = turning down. Bar height = the size of that gap.
Data summary: MACD is currently above its signal line by 1.05, positive momentum.
Relative performance vs S&P 500 & its sector (XLK (sector)), set to 100 a year ago
Solid = JKHY · dashed = S&P 500 · dotted = XLK (sector). A rising line means it is beating that benchmark — the sector line shows whether it is a leader or laggard within its own group.
Forward revenue & earnings actual → estimate · "FY" = fiscal year, "E" = estimate
Darker bars = actual results, brighter = analyst estimates. Taller bars to the right = expected growth.
Key stats an RIA wants
1. What it is
Jack Henry & Associates (Nasdaq: JKHY) is a ~50-year-old financial-technology company headquartered in Monett, Missouri that provides the core processing, payments, and digital-banking software that small and mid-size US banks and credit unions run their institutions on. Founded 1976, IPO 1985. Fiscal year ends June 30.
It sells the plumbing of community banking: the SilverLake / CIF 20/20 / Core Director core systems for banks, the Symitar core for credit unions, the Banno digital-banking platform, and card/ACH/faster-payments processing. This is textbook vertical-market software — mission-critical, deeply embedded, sold on multi-year recurring contracts with very high switching costs.
Revenue mix (FY2025, from segmentation filings):
- By segment: Payments $873.5M (37%) · Core $739.3M (31%) · Complementary $675.2M (28%) · plus Corporate & Other. All three growing high-single digits; Payments is the largest and a key growth lever (faster-payments revenue grew ~46% YoY in the latest quarter per the earnings release, §9).
- By revenue type (Q3 FY26 release): Services & Support ~57% · Processing ~43% — a heavily recurring mix.
- By geography: essentially 100% United States (FMP provides no geographic segmentation; the customer base is domestic community financial institutions). Concentrated in one country and one end-market — a durability strength and a TAM-ceiling weakness (§4, §11).
2. The expert thesis — thin coverage, read honestly (traceable)
Synthos KB coverage here is thin: 7 total claims, effectively 1 net-bullish voice. This is a fundamentals-and-quant-driven verdict, not a conviction-track call — and we say so plainly. The two claims that matter both come from the same source and actually frame the debate rather than settle it:
- The bull case (quality). Business Breakdowns (
business_breakdowns-HDdFxSyv_1U:f802487969, bullish, conviction 85, skill 1.0): "Best-in-class outsourced tech provider to small/midsize banks; customer-first culture drives >99% retention and structural quality edge." This is the durable-moat thesis, and the financials corroborate it (§5, §8). - The valuation caution (same source, neutral). Business Breakdowns (
business_breakdowns-HDdFxSyv_1U:37b508e331, neutral, conviction 55): "Great business but the stock roughly flat over the past 5 years after compounding ~480× since its 1980s IPO; business dynamics diverge from recent stock dynamics." Translation: a wonderful business does not guarantee a wonderful stock from a full starting multiple — exactly our concern.
Honest composite note. There is no broad expert panel behind this name — one thoughtful voice praising the business and, in the same breath, flagging that the stock has gone nowhere for five years. That balance is why our verdict is Watch and not Buy. The quant and fundamentals carry the weight here, not conviction breadth.
3. Synthos scores & the Bull / Base / Bear cases
The one-glance judgment — three scores, 0–10, each anchored to real metrics (not probabilities we can't honestly calibrate):
| Score | 0–10 | The read |
|---|---|---|
| Downside Risk (lower = safer) | 4 · Low-Moderate | Net cash (net-debt/EBITDA ≈ 0.08×), beta 0.58, >99% retention → structurally sturdy. Offsets: 20.5× trailing on ~8% growth, RSI 77 overbought, and a −30% max drawdown show the multiple can de-rate. |
| Growth Quality | 6 · Good | High-single-digit forward EPS CAGR, gross margin 44%, EBITDA margin 35%, ROE 24%, ROIC ~19% — genuinely high-quality and durable, but the pace is modest. |
| Exponential Potential | 3 · Low | Growth is high-single-digit and decelerating; a saturated US community-bank niche and a $10B cap leave little multibagger runway. A compounder, not an exponential. |
The three cases (our own scenario model — assumptions shown; each target is a ~12–18-month fair value). We deliberately do not attach probabilities: the base case is by definition the expected path, so a weighted blend would just restate it with false precision. The cases bound the range; the scores above summarize them.
| Case | Key assumptions | Fair value |
|---|---|---|
| Bull | Sales pipeline strength (record core wins) + faster-payments ramp lift growth to low-double digits; FY28E EPS ~$8.30 (top of range); market keeps paying a premium ~23.5×. | ~$196 (+33%) |
| Base (our anchor) | Estimates roughly hit — FY28E EPS ~$7.90; a durable ~8% compounder with a net-cash sheet holds a ~20× multiple. | ~$158 (+8%) |
| Bear | Growth fades toward mid-single digits, bank IT budgets tighten, and the multiple reverts toward its ~16× history; FY28E EPS ~$7.60 × ~15×. | ~$112 (−24%) |
Synthos fair value = the base case, ~$158 (+8%), with the full $112–$196 span as the honest range. Note our anchor sits well below the Street's $186.88 consensus: the sell-side is applying a ~24× forward multiple we think is generous for ~8% EPS growth. We give the quality real credit (hence base above spot) but will not underwrite consensus's multiple. This is a tracked call — the Forecaster Scorecard grades it once it matures.
4. Exponential Potential
Synthos separates compounders (durable high returns on capital) from exponentials (accelerating, multi-baggers-from-here). JKHY is a high-quality compounder with low exponential potential:
- Forward growth: revenue CAGR FY25→FY28E ~6.4% ($2.375B → $2.857B); EPS CAGR ~8.2% ($6.24 → ~$7.90 est). Steady, not fast.
- Acceleration (the 2nd derivative) is flat-to-negative: revenue grew +7.2% (FY25) and management guides ~+6% for FY26; the estimate curve shows high-single-digit growth holding, not accelerating. There is no inflection to ride.
- Room to run: the addressable market — US community and mid-size banks/credit unions — is mature and consolidating (bank M&A slowly shrinks the customer count). At a $10B cap in a niche it already leads, the runway is durability, not explosive TAM expansion.
- Reinvestment runway: high-return but modest — capex ~2.3% of revenue, R&D ~6.7%, and most free cash returns to holders via dividend + buyback rather than funding a growth explosion.
Exponential Potential: Low (3/10). Own JKHY for reliable high-single-digit compounding on a fortress balance sheet — not for a fast multibagger. That honest framing is why, even as a quality name, it sits on the Watch list rather than the growth sleeve.
5. Financials (real numbers — FMP annual/quarterly)
- Revenue: FY25 (June 2025) $2.375B, +7.2% (FY24 $2.216B, +6.6% on FY23 $2.078B). Consistent high-single-digit top line for years.
- Quarterly trajectory: Q1 FY26 $644.7M → Q2 $619.3M → Q3 (Mar-2026) $636.2M, +8.7% YoY; fiscal-YTD revenue +8.0%. Growth is steady and mildly accelerating vs FY25's full-year pace.
- Margins: gross 44.1% TTM, EBITDA 35.3% TTM, operating ~26.0%, net 20.6% TTM. Q3 FY26 operating margin 24.4% (up from 23.7%); YTD operating income +20.6% — margins are expanding faster than revenue, a good sign.
- Earnings: FY25 net income $455.7M, EPS $6.24 (+19% — partly a lower tax rate). TTM EPS ~$7.16; YTD FY26 GAAP EPS $5.41 vs $4.49 (+20.4%).
- Cash flow: FY25 operating CF $641.5M, free cash flow $588M (FCF yield ~5.6%); income quality 1.5× (net income well-backed by cash). Capex is elevated (~$231M in PP&E incl. capitalized software) but true maintenance capex is light.
- Balance sheet: net cash — total debt effectively zero, cash $102M, net-debt/EBITDA ≈ 0.08× (net cash). Current ratio 1.74×. A genuine fortress; virtually no financial-leverage risk.
6. Valuation — priced in or room?
JKHY is not cheap for its growth rate. At 20.5× trailing and ~21× FY26E / ~20× FY27E / ~19× FY28E, you are paying a premium-quality multiple on a ~8% EPS grower — a forward PEG well above 2×. The defense: the recurring, >99%-retention revenue and net-cash sheet deserve a premium to a generic ~8% grower, and EV/EBITDA of 11.8× is far more reasonable than the P/E headline (heavy D&A from capitalized software depresses GAAP EPS). But the multiple, not the growth, has to keep doing the work.
A reality check the KB itself flags (business_breakdowns-HDdFxSyv_1U:37b508e331): the stock was roughly flat for five years as a great business grew into a rich multiple. Reversion toward its historical ~16–18× would offset years of earnings growth.
Street targets (context, not our anchor): consensus $186.88, high $216, low $165; 12 Buy / 10 Hold / 0 Sell; FMP letter rating A. Our base FV of ~$158 is deliberately below consensus — the Street is capitalizing ~8% growth at ~24×, which we find generous. Not a value buy; a quality-compounder-at-a-full-price — hence Watch.
7. Technicals (from the tech block)
- Trend: mixed / repairing. $146.87 sits above the 50-DMA ($138.5) but below the 200-DMA ($159.4) — a downtrend that is trying to turn, not yet a confirmed uptrend.
- Location: −24% off the 52-week high ($192.60), +19% off the 52-week low ($123.42); max drawdown −30.4% from peak — this has been a real correction, not a leadership name.
- Momentum: RSI(14) 77 — overbought (>70). The single clearest technical caution here: a sharp bounce (+3.1% on the quote day) has pushed it into stretched territory. MACD +0.69 (mildly positive).
- Relative strength (the tell): JKHY −19.3% 12-mo vs SPY +20.6% and QQQ +30.3%; −20.4% 6-mo, −5.6% 3-mo. Persistent underperformance of both the market and the Nasdaq — the opposite of a momentum leader.
- Read: technicals argue patience. The chart is repairing off a −30% drawdown but is now overbought and still below the 200-DMA. A pullback that resets RSI and holds the rising 50-DMA (~$138) would be a far better-risk entry than chasing the bounce.
8. Moat & competitive position
JKHY's moat is classic vertical-market software: (1) mission-critical lock-in — a bank's core system is the hardest software on earth to rip out; (2) >99% customer retention (business_breakdowns-HDdFxSyv_1U:f802487969), among the best in all of software; (3) a culture / service reputation with community banks that competitors struggle to match; and (4) an expanding attach of Payments and Complementary products onto the installed core base. The competitive frame is an oligopoly with FIS and Fiserv (the two much-larger core processors) plus digital-banking challengers (nCino, Q2, MeridianLink); Jack Henry's edge is the small/mid-bank segment and service quality, not scale.
Peer set (FMP-supplied, market cap): the provided peer list is a loose IT-services basket rather than true core-processing comps — Akamai $16.5B, Manhattan Associates $8.9B, Paycom $7.6B, EPAM $4.6B, CACI $11.1B, InterDigital $7.3B, Pegasystems $5.2B, Skyworks $9.4B, Applied Digital $9.4B, Aurora $13.0B. The more relevant real-world comparables are Fiserv and FIS (bank-tech scale peers) and vertical-SaaS quality names like Manhattan Associates and Paycom. Against that group JKHY offers the cleanest balance sheet and stickiest revenue, but the slowest growth.
9. Management, capital allocation & guidance
- Capital allocation: shareholder-friendly and conservative — FY25 returned ~$165M in dividends (payout ~33%, yield ~1.6%) plus buybacks (~$284M YTD FY26 at avg ~$160), funded from FCF while carrying net cash. Disciplined, no leverage games.
- Insider activity (a positive tell): unlike routine option-driven selling, the CEO and CFO were open-market buyers in May 2026 — CEO Greg Adelson bought 2,000 shares at $133.42 and CFO Mimi Carsley bought 375 at $134.12 (both 2026-05-14, Form 4 P-Purchase). Insiders adding near $133–134 is a modest but genuine vote of confidence at prices below today's $147.
- Management's own guidance (half-weighted — their self-interested words). The SEC 8-K earnings release (Q3 FY26, filed 2026-05-05) is a real earnings release and gives explicit full-year FY26 guidance: GAAP revenue $2,521–2,533M, operating margin 24.7–24.9%, GAAP EPS $6.78–6.87 (non-GAAP adjusted revenue $2,479–2,491M, adjusted operating margin 23.9–24.1%). CEO Greg Adelson highlighted "17 competitive core wins in the quarter — our best third quarter for new core wins in the last seven years" and an increasing sales pipeline "fueled by increased technology spending and competitive uncertainty." Treat as management's own book, half-weighted — but the guidance brackets the Street's ~$6.85 FY26E EPS, and the core-wins commentary supports the durable-moat thesis.
10. Catalysts & what to watch
- Next earnings: 2026-08-18 (Q4 + full-year FY26; Street EPS $1.43 for the quarter, ~$6.85 for the year). Key line: whether FY26 lands in/above the $6.78–6.87 guide and whether FY27 guidance re-accelerates.
- Core wins & sales pipeline: management's "best Q3 core wins in 7 years" — does the pipeline convert to accelerating revenue?
- Payments / faster-payments ramp: faster-payments revenue +46% YoY; the fastest-growing lever inside the mix.
- Multiple / rate backdrop: as a bond-proxy-like quality compounder, the P/E is sensitive to the rate environment and to any growth disappointment.
- Bank-sector health: community-bank M&A and IT-budget cycles drive the customer base.
Thesis tripwires (what would change the call): revenue growth slipping below ~5%; a step-down in retention below ~99%; the multiple expanding further without a growth re-acceleration (raises downside-risk); or, on the upside, a pullback to the mid-$130s that resets valuation and RSI (would move us toward Buy — Tactical).
11. Key risks
- Valuation / de-rating (the core risk): ~20× trailing on ~8% EPS growth. The KB's own caution — five years of a flat stock despite a great business (
business_breakdowns-HDdFxSyv_1U:37b508e331) — is the base rate to respect. - Slow growth / limited TAM: a mature, consolidating US community-bank market; no international or exponential runway to speak of.
- Larger competitors: FIS and Fiserv dwarf JKHY in scale and can subsidize price; digital-banking challengers (nCino, Q2) attack the Complementary layer.
- Overbought entry: RSI 77 and still below the 200-DMA — a poor-risk chase point today.
- Thin expert coverage: only 1 net-bullish voice / 7 claims in the KB — low conviction breadth; the verdict leans on quant and fundamentals, not a panel.
12. Verdict, position sizing & monitoring
Watch. Jack Henry is a genuinely excellent business — >99% retention, net cash, 24% ROE, expanding margins, insider buying — and we would happily own it. But two things hold us at Watch rather than Buy: (1) the price (~20× trailing / ~24× on the Street's math for an ~8% grower), which the KB's own valuation caution flags as the reason the stock went nowhere for five years; and (2) the entry (RSI 77, below the 200-DMA, chasing a bounce). Great company, wrong price/moment.
- Sizing: watch-list; if added, a 1–3% starter only on a pullback that resets the multiple/RSI (mid-$130s or lower). A move toward the low-$130s with the fundamentals intact would upgrade this to Buy — Tactical.
- Monitoring: re-underwrite on the tripwires in §10; formal re-score at the 2026-08-18 print. This verdict is logged as a tracked Synthos call as of 2026-07-03 at $146.87.
- Single biggest risk: paying a premium multiple for high-single-digit growth — the price, not the business, is where this call can go wrong.
Provenance & disclosures
- Traceability: 7 KB claims, breadth 1 net-bullish voice, top skill 1.0 (Business Breakdowns), last claim 2025-03-02 — both cited claims reconcile to real
claim_ids inline. Thin coverage is disclosed, not papered over; fabricated conviction is structurally impossible (claim-ID reconciliation). - Data as-of: fundamentals 2026-03-31 (Q3 FY26) · estimates & prices 2026-07-02/03 · expert claims through 2025-03-02. Forward figures are analyst consensus (FMP) or management guidance, labeled as estimates.
- Management caveat: FY26 guidance (revenue $2,521–2,533M, EPS $6.78–6.87) is management's own book from the SEC 8-K Item 2.02 release, half-weighted by design.
- Not investment advice. Independent research, educational and informational only, never personalized. Hypothetical/forward figures are labeled; the only performance numbers Synthos will headline are the live, real-money Flagship's.
- Version: 2026-07-03. Prior versions available via the deep-dive version dropdown ("based on the info at the time").