Jack Henry & Associates, Inc.JKHYNASDAQ

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $258.10 per share(market-calibrated)

+57.2%

Upside to Fair Value

Current

$164.20

Pure Model

$276.66

Fair Value

$258.10

Bull Case

$349.57

Bear Case

$218.18

Market Reality Check

Model Terminal Growth

3.75%

Market-Implied Growth

0.63%

Calibrated Growth

2.66%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $276.66.

What's Driving This Ratingfor JKHY

✓

CapEx already efficient

CapEx at 3.17% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

✓

Premium margins already priced in

EBIT margin of 26.88% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects 6.06% revenue growth, fading to 3.75% by Year 10. Revenue reaches $3.7B (vs $2.4B today).

🎯

Market pricing in lower growth than model

The market implies only 0.63% perpetual growth — 312bps below the model's 3.75%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 73.57% indicates efficient cash generation. FCF reaches $961M by Year 10 (25.67% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.71

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)7.69%

Cost of Debt

Pre-tax Cost of Debt5.00%

Tax Rate22.23%

After-tax Cost of Debt3.89%

Equity Weight (E/V)100.00%

Debt Weight (D/V)0.00%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (100.00% × 7.69%) + (0.00% × 3.89%)

= 7.69%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$2.5B	$2.9B	$3.1B	$3.4B	$3.7B
EBIT	$677M	$767M	$837M	$901M	$1.0B
Tax	$151M	$171M	$186M	$200M	$224M
NOPAT	$527M	$597M	$651M	$701M	$783M
+ Depreciation	$202M	$228M	$249M	$268M	$300M
- Capex	$80M	$91M	$99M	$106M	$119M
- Δ NWC	$3M	$4M	$2M	$2M	$3M
Free Cash Flow	$646M	$731M	$800M	$861M	$961M
Discount Factor	0.929	0.801	0.690	0.595	0.476
Present Value	$599M	$585M	$552M	$512M	$458M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$961M

Terminal Growth Rate3.75%

WACC7.69%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$25.3B

PV of Terminal Value$12.0B

Exit Multiple Method

Year 10 EBITDA$1.3B

Exit Multiple (EV/EBITDA)28.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$36.6B

PV of Terminal Value$17.4B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$5.4B

PV of Terminal Value$12.0B

Enterprise Value$17.4B

(-) Net Debt-$102M

Equity Value$17.5B

Shares Outstanding73M

Price per Share$239.80

Exit Multiple Method

PV of Projected FCFs$5.4B

PV of Terminal Value$17.4B

Enterprise Value$22.8B

(-) Net Debt-$102M

Equity Value$22.9B

Shares Outstanding73M

Price per Share$313.52

Pure Model Fair Value

$276.66

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.75%	3.25%	3.75%	4.25%	4.75%
5.69%	$358.44	$386.19	$420.67	$403.95	$388.02
6.69%	$299.22	$312.73	$330.83	$356.32	$388.02
7.69%	$259.35	$267.03	$276.66	$289.08	$305.71
8.69%	$229.63	$234.42	$240.19	$247.26	$256.12
9.70%	$206.08	$209.27	$213.01	$217.43	$222.74

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$218.18

32.9% vs current

• -25% vs analyst consensus
• Terminal growth: 3.3%
• Beta: 0.89

Base Case

$276.66

68.5% vs current

• Analyst consensus
• Terminal growth: 3.8%
• Beta: 0.71

Bull Case

$349.57

112.9% vs current

• +25% vs analyst consensus
• Terminal growth: 4.3%
• Beta: 0.60

Key Assumptions & Drivers• Technology Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth6.06%

Year 3 Revenue Growth6.63%

Year 5 Revenue Growth3.75%

Year 7 Revenue Growth3.75%

Year 10 Revenue Growth3.75%

Terminal Growth Rate3.75%

Margin & Efficiency

Current EBIT Margin26.88%

Tax Rate22.23%

Historical Capex / Rev3.17%

NWC / Revenue1.97%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 28x EV/EBITDA (Technology sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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