Jack Henry & Associates, Inc.

JKHY Details

Jack Henry & Associates, Inc. (NASDAQ: JKHY) is a major provider of technological solutions and payment processing services to the financial services industry. JKHY sells its products and services under three different business brands: Jack Henry Banking, Symitar, and ProfitStars. It earns money from two different sources: 1) Services and support income, including private and public cloud fees, product delivery and services, and on-premises support fees; and 2) Processing revenue, including remittances, card fees, and transaction and digital revenues. SilverLake, CIF 20/20, Core Director, and Episys are among JKHY's core software solutions.

New Integrations with Community Banks: On September 01, 2021, the Jack Henry Banking division of JKHY stated that during H1CY21, five community banks chose the Core Director software system and are implementing it in Jack Henry's private cloud environment. 

New Service Offering: The Jack Henry Banking division announced the debut of SecurePort, a protected Harbor solution, on August 31, 2021. SecurePort service aids banks in utilizing the SilverLake core systems to provide end customers with quick access to their account balances and funds if essential systems and traditional backups fail.

FY21 Results: The company reported a 3.60% increase in revenues to USD 1.76 billion in FY21 (ended June 30, 2021) compared to USD 1.70 billion in FY20. In addition, the company reported a slight increase in net income to USD 311.47 million in FY21 vs. USD 296.67 million in FY20. As of June 30, 2021, the company's balance sheet stood with cash and cash equivalents of USD 50.99 million and total debt of USD 100.19 million.

Key Risks: Some of JKHY's most significant solutions rely on IBM Corporation and Microsoft. As a result, termination of the partnership with these companies might severely influence JKHY's operations.

Furthermore, new rivals with new products, services, and technology for financial institutions arise regularly. If rivals provide better pricing or evolved technologies, or if the company cannot acquire new customers, it may be forced to cut prices or offer other terms that negatively damage its operating performance to compete successfully.

Outlook: In its FY21 earnings release, JKHY stated that it expects FY22 GAAP revenues to range between USD 1.90 to USD 1.91 billion, with GAAP EPS of around USD 4.53 to USD 4.60.

Valuation Methodology: Price/Earnings Per Share Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

JKHY Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: JKHY's share price surged 16.58% in the past six months and is currently trading at the higher band of the 52-week range of USD 141.65 to USD 179.98. The stock is currently trading above its 50 and 200 DMA levels, and its RSI Index is at 47.24. We have valued the stock using the Price/Earnings-based relative valuation methodology and arrived at a target price of USD 181.34. Considering the company's growth prospects, new service offerings, associated risks, and current valuation, we recommend a "Hold" rating on the stock at the current price of USD 173.58, down 1.23% as of September 07, 2021, 1:59 PM ET.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.

Aspen Technology, Inc. 

AZPN Details

Aspen Technology, Inc. (NASDAQ: AZPN) is a major global provider of asset optimization software focused on improving asset design, operations, and maintenance in complex industrial applications. It operates in two segments: 1) Subscription and Software, which includes the licensing of process optimization and asset performance management software solutions, as well as other allied support services; and 2) Services and Other, generating revenue from professional services, training, and other services. AZPN has approximately 2500 customers globally. As of September 07, 2021, the company's market capitalization stood at USD 8.78 billion.

Evolution Mining Deploys AZPN's Software: AZPN reported on August 17, 2021, that Evolution Mining, an Australian gold mining firm, implemented the Aspen Mtell software at its Mungari Gold operations in Western Australia to minimize unplanned downtime and give data to support productivity gains. The software analyses historical and real-time operational and maintenance data to identify exact failure patterns and prescribe comprehensive measures to prevent/fix issues through predictive and prescriptive maintenance. 

Share Repurchase Program: AZPN launched a new share repurchase program on June 14, 2021, to buy back up to USD 300 million of its outstanding common stock in FY22 (ending June 30, 2022). The program also includes an agreement with JPMorgan Chase Bank, NA, for buying back up to USD 150 million of AZPN common stock.

FY21 Results: The company reported an 18.48% increase in revenues to USD 709.38 million in FY21 (ended June 30, 2021) compared to USD 598.72 million in FY20, due to an increase in license and maintenance revenue during the year. In addition, the company reported an increase in net income to USD 319.80 million in FY21 vs. USD 229.67 million in FY20. As of June 30, 2021, the company's cash and cash equivalents were USD 379.85 million, and total debt amounted to USD 293.16 million.

Key Risks: As of June 30, 2021, AZPN operates in 35 countries, and income from clients outside the US account for a substantial part of its overall revenue. As a result, global economic and regulatory landscape changes in the nations where the firm works might harm its financial situation and cash flows.

Outlook: As of August 11, 2021, AZPN expects its total FY22 revenue to range between USD 702 to USD 737 million, with GAAP net income of USD 288 to USD 314 million. Total bookings for the year are estimated to range from USD 766 to 819 million, and free cash flow will be around USD 275 to USD 285 million.

Valuation Methodology: EV / Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's FY1 trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

AZPN Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: AZPN's share price fell 15.43% in the past six months and is currently trading at the mid-band of the 52-week range of USD 108.15 to USD 162.56. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 36.65. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 133.98. Considering the growth prospects, increasing demand for optimization software platforms, associated risks, and current valuation, we recommend a "Hold" rating on the stock at the closing price of USD 127.89, down 2.31% as of September 07, 2021.

*All forecasted figures and Industry Information have been taken from REFINITIV.

*The reference data in this report has been partly sourced from REFINITIV.  

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