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Today we’re going to take a look at the well-established Jack Henry & Associates, Inc. (NASDAQ:JKHY). The company’s stock saw significant share price movement during recent months on the NASDAQGS, rising to highs of $149.06 and falling to the lows of $130.7. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Jack Henry & Associates’s current trading price of $137.97 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Jack Henry & Associates’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Jack Henry & Associates still cheap?
The stock seems fairly valued at the moment according to my relative valuation model. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 36.69x is currently trading slightly above its industry peers’ ratio of 34.89x, which means if you buy Jack Henry & Associates today, you’d be paying a relatively fair price for it. And if you believe that Jack Henry & Associates should be trading at this level in the long run, there’s only an insignificant downside when the price falls to its real value. In addition to this, it seems like Jack Henry & Associates’s share price is quite stable, which could mean there may be less chances to buy low in the future now that it’s fairly valued. This is because the stock is less volatile than the wider market given its low beta.
What kind of growth will Jack Henry & Associates generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. Jack Henry & Associates’s earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? JKHY’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at JKHY? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping an eye on JKHY, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic forecast is encouraging for JKHY, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Jack Henry & Associates. You can find everything you need to know about Jack Henry & Associates in the latest infographic research report. If you are no longer interested in Jack Henry & Associates, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.