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Last update on 2024-06-06

Jack Henry & Associates (JKHY) - Piotroski F-Score Analysis for Year 2023 (Final Score: 4/9)

Detailed Piotroski F-Score analysis for Jack Henry & Associates (JKHY) in 2023, scoring 4/9. Learn about their profitability, liquidity, and operational metrics.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 4

We're running Jack Henry & Associates (JKHY) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
0
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
0
Current Ratio is growing?
1
Number of shares not diluted?
0
Cross Margin is growing?
0
Asset Turnover Ratio is growing?
0

Jack Henry & Associates (JKHY) has a Piotroski F-Score of 4 out of 9, reflecting a moderate financial position. The company has a positive net income and cash flow for 2023, and its operating cash flow exceeds net income, showing good cash-generating ability and quality earnings. However, its return on assets and asset turnover are declining, and its leverage has increased, suggesting higher financial risk. The gross margin is also slightly down, reflecting potential inefficiencies. Despite a rise in current ratio indicating better liquidity, a slight increase in outstanding shares suggests potential share dilution.

Insights for Value Investors Seeking Stable Income

While Jack Henry & Associates shows some strengths like positive cash flow and income, the declining return on assets, increased leverage, and slight rise in shares are concerning. With a Piotroski score of 4, it falls in a moderate position. Investors may want to delve deeper into the causes of these declines and leverage increase before committing. It is advised to consider more information and watch for improvements in key areas such as asset utilization and financial stability to make an informed decision.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Jack Henry & Associates (JKHY)

Company has a positive net income?

This criterion examines if the company has a positive net income, which indicates profitability and successful business strategies.

Historical Net Income of Jack Henry & Associates (JKHY)

For the fiscal year 2023, Jack Henry & Associates (JKHY) reported a net income of $366,646,000. This figure is positive, thereby earning a point under the Piotroski analysis. Historically, the company has shown a consistent uptrend in net income over the past 20 years, growing from $49,397,000 in 2003 to its current level. Such a continued increase in net income reflects effective management and robust operational efficiency. Overall, this is a positive sign as it indicates sustained profitability over the long term, reassuring investors of the company's financial health and growth potential.

Company has a positive cash flow?

Cash Flow from Operations (CFO) measures the cash a company generates from its normal business operations.

Historical Operating Cash Flow of Jack Henry & Associates (JKHY)

In 2023, Jack Henry & Associates (JKHY) reported a positive Cash Flow from Operations (CFO) of $381,559,000. This is a significant aspect as it ensures that the company has the cash needed to invest in growth, pay off debts, and return value to shareholders. However, comparing this figure with previous years, it is observable that the CFO has decreased from the prior year, 2022, where the CFO was $504,631,000. Nevertheless, the consistent positive CFO over the past 20 years shows strong operational efficiency. Hence, for 2023, we assign 1 point.

Return on Assets (ROA) are growing?

Change in Return on Assets for Jack Henry & Associates and why it is important to consider

Historical change in Return on Assets (ROA) of Jack Henry & Associates (JKHY)

In the fiscal year 2023, Jack Henry & Associates (JKHY) recorded a Return on Assets (ROA) of 0.1402, a decline from the 2022 ROA of 0.1515. The decrement in ROA from 2022 to 2023 results in zero points being assigned for this Piotroski criterion. This downward trend indicates a decrease in JKHY's efficiency in generating profits from its assets. Considering historical data, ROA has varied significantly over the years; for instance, it peaked at industry medians of 0.3421 in 2010 and hit a low in recent years, underscoring the fluctuating efficiency within the industry. Thus, although JKHY's ROA decline is concerning, it mirrors broader industry volatility.

Operating Cashflow are higher than Netincome?

Operating Cash Flow (OCF) higher than Net Income is a strong indicator. It suggests that the company is generating more cash than its net earnings indicate, signifying efficient revenue realization and high-quality earnings. This is crucial because it shows the firm's ability to generate sufficient cash to cover bills, dividends, and investments without relying on external financing.

Historical accruals of Jack Henry & Associates (JKHY)

For Jack Henry & Associates (JKHY), the Operating Cash Flow in 2023 is $381,559,000, which is higher than the Net Income of $366,646,000 for the same year. This condition meets the criterion and thus adds 1 point to the Piotroski Score. Historically, the company has consistently maintained strong operating cash flows compared to net income, showcasing its strong cash-generating ability, which is a positive sign for investors.

Liquidity of Jack Henry & Associates (JKHY)

Leverage is declining?

Change in Leverage is an indicator that evaluates the shifting levels of a company's debt relative to its equity, reflecting its risk profile and financial stability.

Historical leverage of Jack Henry & Associates (JKHY)

Analyzing the data for Jack Henry & Associates (JKHY), the leverage ratio increased from 0.0468 in 2022 to 0.0991 in 2023. This represents a point increase of 0.0523, or over 111%. Historically, the company's leverage has been conservative, often hovering below 0.1 when comparing data from 2003 to 2023. Despite past periods of zero leverage, the current rise could raise concerns over increasing debt load against equity, suggesting elevated financial risk. Result: The Leverage has increased in 2023, thus scoring 0 points in the Piotroski Analysis.

Current Ratio is growing?

Explain the criterion for Jack Henry & Associates (JKHY) and why it is important to consider

Historical Current Ratio of Jack Henry & Associates (JKHY)

The Current Ratio evaluates a company's ability to pay its short-term liabilities with its short-term assets. A higher ratio indicates a better liquidity position. Jack Henry & Associates (JKHY) had a Current Ratio of 1.199 in 2023 as compared to 1.1282 in 2022, indicating an improvement in its liquidity position in 2023. This trend is favorable as it suggests that the company is better able to cover its short-term obligations. Historically, JKHY's current ratio has fluctuated significantly but the recent increase is a positive indicator, especially when considering that the Industry Median Current Ratio for 2023 is 1.4169.

Number of shares not diluted?

Evaluating changes in shares outstanding is crucial as it affects shareholder value and earnings per share (EPS).

Historical outstanding shares of Jack Henry & Associates (JKHY)

In the case of Jack Henry & Associates, the outstanding shares increased from 72,878,821 in 2022 to 72,918,000 in 2023. This signifies an increment of 39,179 shares. Typically, an increase in outstanding shares can be seen as a negative indicator within the Piotroski F-Score framework as it may potentially dilute the value of existing shares. Over the last two decades, the company has shown both increases and reductions in outstanding shares, with more significant reductions observed since 2015. Despite this long-term trend, the slight increase in 2023 earns 0 points since there was no reduction in outstanding shares.

Operating of Jack Henry & Associates (JKHY)

Cross Margin is growing?

The 'Change in Gross Margin' criterion measures efficiency in cost management. An increasing gross margin reflects better cost control and pricing strategy.

Historical gross margin of Jack Henry & Associates (JKHY)

For Jack Henry & Associates (JKHY), the Gross Margin has decreased from 0.4191 in 2022 to 0.4133 in 2023. This is a negative trend and results in 0 points for this criterion. In contrast, it is noteworthy that JKHY's Gross Margin has consistently remained above the industry median, which stands at 0.3391 in 2023. The company's Gross Margin has shown resilience over the past two decades despite minor fluctuations, always staying significantly above the industry average.

Asset Turnover Ratio is growing?

The criterion focuses on asset turnover, which is calculated by dividing net sales by average total assets. Measuring the efficiency of a company in using its assets to generate sales, it is crucial to assess operational performance.

Historical asset turnover ratio of Jack Henry & Associates (JKHY)

In 2023, Jack Henry & Associates has an asset turnover of 0.7946, a decrease from 0.8109 in 2022. This slight downturn (-0.0163) indicates reduced efficiency in asset utilization. Over the last 20 years, the company's asset turnover ratio has fluctuated between 0.6299 and 0.8109, revealing historical fluctuations in operational effectiveness. Therefore, a score of 0 is awarded for this criterion given the decline in 2023.


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