DCF Studio

    JKHY · NMS · Technology

    Jack Henry & Associates, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 140.45

    Market price

    USD 154.85

    Implied upside

    -9.3%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 140.45-9.3%
    Exit multiple
    USD 166.22+7.3%
    Market price
    USD 154.85

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m271m541mFY27FY28FY29FY30FY31
    Nominal FCFFDiscounted to todayUSD
    LineFY27FY28FY29FY30FY31CAGR
    RevenueUSD 2.7bnUSD 2.9bnUSD 3.1bnUSD 3.3bnUSD 3.6bn+7.0%
    EBITUSD 640.6mUSD 685.3mUSD 733.2mUSD 784.4mUSD 839.2m+7.0%
    NOPATUSD 506.0mUSD 541.4mUSD 579.2mUSD 619.7mUSD 663.0m+7.0%
    Add depreciation & amortisationUSD 239.6mUSD 256.3mUSD 274.2mUSD 293.4mUSD 313.9m+7.0%
    Less capital expenditureUSD -273.7mUSD -292.9mUSD -313.3mUSD -335.2mUSD -358.6m+7.0%
    Less increase in working capitalUSD -58.7mUSD -62.8mUSD -67.1mUSD -71.8mUSD -76.9m+7.0%
    Free cashflow to firmUSD 413.2mUSD 442.1mUSD 473.0mUSD 506.0mUSD 541.4m+7.0%
    Discount factor0.95840.88020.80840.74250.6819-
    Present valueUSD 396.0mUSD 389.1mUSD 382.4mUSD 375.7mUSD 369.2m-1.7%
    Present Value Of The ForecastUSD 1.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.708Reported 0.564, pulled toward 1.0 (Blume)
    Cost of equity8.89%Risk-free + beta x equity risk premium
    Cost of debt7.00%Implied cost of debt of 26.9% is not a credible funding cost, so risk-free + 2bp is assumed instead. Interest expense and reported debt are measuring different things - common for banks, whose interest expense includes deposits that total debt excludes.
    Market capitalisationUSD 10.9bn99.6% of capital
    Total debtUSD 40.0m0.4% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.88%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 140.45

    81% of EV

    Forecast FCFF, final year
    USD 541.4m
    Capex at depreciation, working capital in reinvestment
    USD 855.1m
    Less reinvestment at g/ROIC (12.1% of NOPAT)
    USD -103.7m
    Capitalised
    USD 751.4m
    ROIC (reported)
    20.6%
    Terminal value, undiscounted
    USD 12.1bn
    Terminal value, discounted
    USD 8.2bn
    Enterprise value
    USD 10.1bn
    Less net debt
    USD 27.9m
    Equity value
    USD 10.1bn

    Exit at 12.8x EBITDA

    Value per shareUSD 166.22

    84% of EV

    Terminal value, undiscounted
    USD 14.8bn
    Terminal value, discounted
    USD 10.1bn
    Enterprise value
    USD 12.0bn
    Less net debt
    USD 27.9m
    Equity value
    USD 12.0bn

    Spread between methods: 17%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.88%181.35193.51208.39227.05251.17
    7.88%151.26158.96168.06178.98192.34
    8.88%129.40134.53140.45147.34155.47
    9.88%112.82116.38120.39124.96130.21
    10.88%99.84102.36105.17108.31111.85

    Outlined: this model. Green text: above today's price of 154.85. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year7.0%9.5%+2.5pp
    EBIT margin23.5%26.3%+2.8pp
    Discount rate8.9%8.3%-0.6pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.