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Jack Henry M&A vibes tick higher after earnings report

Aug 19, 2022

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Jack Henry & Associates is an acquisitive, old-school fintech that issued mixed earnings results this week but offered some added deal-making clues in the process.

Why it matters: The Missouri-based payment processing company has a market value of nearly $15 billion, a stock (Nasdaq: JKHY) trading around $200 per share, and expected 2023 EBITDA of $655 million.

  • As research firm Gordon Haskett poses in a note this week, those numbers give Jack Henry the firepower to pursue a deal in the $2 billion range.

Details: CEO David Foss has indicated that he's keen to get back into the acquisition game.

  • The company did not buy back any stock during the quarter and its price-to-earnings valuation gives Jack Henry the flexibility to use both its cash and stock to pursue a deal. It has minimal debt on the balance sheet.

The bottom line: Foss said in June that using stock for a deal is something he'd consider.

  • "When you add that option into the mix, it's conceivable that JKHY could do something quite meaningful. Whether it will have any success doing so is a question that is looking for an answer," Gordon Haskett said in the note.
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