Critical Review: Jack Henry & Associates (NASDAQ:JKHY) & ServiceNow (NYSE:NOW)
by Kim Johansen · The Markets DailyJack Henry & Associates (NASDAQ:JKHY – Get Free Report) and ServiceNow (NYSE:NOW – Get Free Report) are both large-cap computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, earnings, dividends, risk, analyst recommendations and institutional ownership.
Earnings and Valuation
This table compares Jack Henry & Associates and ServiceNow”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Jack Henry & Associates | $2.46 billion | 4.51 | $455.75 million | $6.96 | 22.15 |
| ServiceNow | $13.28 billion | 7.52 | $1.75 billion | $1.67 | 57.74 |
ServiceNow has higher revenue and earnings than Jack Henry & Associates. Jack Henry & Associates is trading at a lower price-to-earnings ratio than ServiceNow, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a breakdown of recent recommendations and price targets for Jack Henry & Associates and ServiceNow, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Jack Henry & Associates | 0 | 4 | 9 | 1 | 2.79 |
| ServiceNow | 1 | 6 | 34 | 3 | 2.89 |
Jack Henry & Associates presently has a consensus target price of $200.15, suggesting a potential upside of 29.84%. ServiceNow has a consensus target price of $173.46, suggesting a potential upside of 79.89%. Given ServiceNow’s stronger consensus rating and higher possible upside, analysts clearly believe ServiceNow is more favorable than Jack Henry & Associates.
Volatility & Risk
Jack Henry & Associates has a beta of 0.72, indicating that its share price is 28% less volatile than the S&P 500. Comparatively, ServiceNow has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500.
Profitability
This table compares Jack Henry & Associates and ServiceNow’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Jack Henry & Associates | 20.59% | 23.75% | 16.80% |
| ServiceNow | 13.16% | 18.54% | 9.25% |
Insider & Institutional Ownership
98.8% of Jack Henry & Associates shares are held by institutional investors. Comparatively, 87.2% of ServiceNow shares are held by institutional investors. 0.6% of Jack Henry & Associates shares are held by insiders. Comparatively, 0.3% of ServiceNow shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Summary
ServiceNow beats Jack Henry & Associates on 9 of the 15 factors compared between the two stocks.
About Jack Henry & Associates
Jack Henry & Associates, Inc. is a financial technology company, which engages in the provision of technology solutions and payment processing services. It operates through the following segments: Core, Payments, Complementary, and Corporate and Other. The Core segment provides core information processing platforms to banks and credit unions which consist of integrated applications required to process deposit, loan, and general ledger transactions, and maintain centralized customer and member information. The Payments segment includes secure payment processing tools and services including ATM, debit, and credit card processing services, online and mobile bill pay solutions, ACH origination and remote deposit capture processing, and risk management products and services. The Complementary segment focuses on additional software, hosted processing platforms, and services including call center support, network security management, consulting, and monitoring. The Corporate and Other segment offers hardware and other products. The company was founded by Jerry D. Hall and John W. Henry in 1976 and is headquartered in Monett, MO.
About ServiceNow
ServiceNow, Inc. provides end to-end intelligent workflow automation platform solutions for digital businesses in the North America, Europe, the Middle East and Africa, Asia Pacific, and internationally. The company operates the Now platform for end-to-end digital transformation, artificial intelligence, machine learning, robotic process automation, process mining, performance analytics, and collaboration and development tools. It also provides asset management, cloud observability, integrated risk management; information technology (IT) service management applications; IT service management product suite for enterprise's employees, customers, and partners; strategic portfolio management product suite; IT operations management product that connects a customer's physical and cloud-based IT infrastructure; IT asset management; and security operations that connects with internal and third party. In addition, the company offers integrated risk management product to manage risk and resilience; environmental, social and governance management product; human resources, legal, and workplace service delivery products; customer service management product; and field service management applications. Further, the company provides app engine product; automation engine; platform privacy and security product; and source-to-pay operations. It serves to government, financial services, healthcare, telecommunications, manufacturing, IT services, technology, oil and gas, education, and consumer products through service providers and resale partners. The company was formerly known as Service-now.com and changed its name to ServiceNow, Inc. in May 2012. ServiceNow, Inc. was founded in 2004 and is headquartered in Santa Clara, California.