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Jack Henry & Associates, Inc. (JKHY) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Jack Henry & Associates, Inc. (JKHY)

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Intrinsic Value (DCF)

Current$191.25
→
Intrinsic$173.88
-9%
$119.21$173.88$277.78
Market implies 14% growth for 5 years
JKHY appears fairly valued — current price aligns with our DCF estimate.
At $191, the market prices in 14% annual cash flow growth — a moderate expectation aligned with historical trends (12%).
Range: Bear $119 → Bull $278. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →8%10%12%14%
8%$208$226$246$267
10%$148$160$174$188
12%$115$124$134$145
14%$93$101$109$117

Bull Case

  • Bull case ($278) offers 45% upside at 14% growth, 9% discount
  • Conservative 12% growth assumption is achievable based on track record

Bear Case

  • Bear case ($119) implies 38% downside at 10% growth, 12% discount
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5-Year Free Cash Flow Projection

Year 1$659.00M
Year 2$738.40M
Year 3$827.36M
Year 4$927.03M
Year 5$1.04B
Terminal$15.28B

📐 Model Inputs

Growth Rate12.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$588.15MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is JKHY stock undervalued or overvalued?
🟡 FAIRLY VALUED

JKHY trades at $191.25, within 10% of our $173.88 intrinsic value estimate. At 10.0% WACC and 12.0% FCF growth, the market is pricing in assumptions roughly aligned with the 5-year historical CAGR. The valuation range spans $122.01 (bear) to $245.78 (bull).

What is JKHY's intrinsic value?

Using a 5-year DCF model: Base FCF of $588M, projected at 12.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $-102M net debt and dividing by 0.07B shares: Bear $122.01 | Base $173.88 | Bull $245.78. Current price $191.25 implies -6% to base case.

How is JKHY's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 12.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($12.60B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 21.4x.