Critical Comparison: Jack Henry & Associates (NASDAQ:JKHY) and Mastercard (NYSE:MA)

Mastercard (NYSE:MA) and Jack Henry & Associates (NASDAQ:JKHY) are both large-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their profitability, risk, institutional ownership, earnings, valuation, dividends and analyst recommendations.

Valuation and Earnings

This table compares Mastercard and Jack Henry & Associates”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mastercard	$36.29 billion	15.86	$14.97 billion	$19.12	34.55
Jack Henry & Associates	$2.54 billion	4.81	$502.78 million	$7.28	24.16

Mastercard has higher revenue and earnings than Jack Henry & Associates. Jack Henry & Associates is trading at a lower price-to-earnings ratio than Mastercard, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Mastercard and Jack Henry & Associates’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mastercard	46.73%	260.86%	31.44%
Jack Henry & Associates	19.96%	24.46%	16.68%

Dividends

Mastercard pays an annual dividend of $3.48 per share and has a dividend yield of 0.5%. Jack Henry & Associates pays an annual dividend of $2.44 per share and has a dividend yield of 1.4%. Mastercard pays out 18.2% of its earnings in the form of a dividend. Jack Henry & Associates pays out 33.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Mastercard has increased its dividend for 13 consecutive years and Jack Henry & Associates has increased its dividend for 35 consecutive years. Jack Henry & Associates is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

97.3% of Mastercard shares are owned by institutional investors. Comparatively, 98.8% of Jack Henry & Associates shares are owned by institutional investors. 0.1% of Mastercard shares are owned by insiders. Comparatively, 0.4% of Jack Henry & Associates shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Risk & Volatility

Mastercard has a beta of 0.78, suggesting that its share price is 22% less volatile than the S&P 500. Comparatively, Jack Henry & Associates has a beta of 0.55, suggesting that its share price is 45% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Mastercard and Jack Henry & Associates, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mastercard	1	1	31	2	2.97
Jack Henry & Associates	0	5	12	1	2.78

Mastercard currently has a consensus price target of $713.21, indicating a potential upside of 7.96%. Jack Henry & Associates has a consensus price target of $193.18, indicating a potential upside of 9.82%. Given Jack Henry & Associates’ higher probable upside, analysts plainly believe Jack Henry & Associates is more favorable than Mastercard.

Summary

Mastercard beats Jack Henry & Associates on 13 of the 18 factors compared between the two stocks.

About Mastercard

Mastercard Incorporated is a global payments technology company that operates a network connecting consumers, merchants, financial institutions, businesses and governments. Its network supports electronic payments, including transactions made with Mastercard-branded credit, debit and prepaid cards, as well as digital payment methods. The company provides technology for authorizing, clearing and settling transactions. It also offers services related to cybersecurity, identity verification, data analytics, fraud prevention and payment consulting.

About Jack Henry & Associates

Jack Henry & Associates, Inc. is a financial technology company that provides software and services to banks and credit unions. Founded in 1976 and headquartered in Monett, Missouri, the company focuses on helping financial institutions manage operations and serve customers. Its offerings include core banking systems, digital banking platforms, payment processing, lending solutions, and tools for managing fraud, risk, and information security. Jack Henry also provides data, hosting, and related technology services.