Jack Henry & Associates (NASDAQ:JKHY) and PayPal (NASDAQ:PYPL) Head to Head Analysis

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

Analyst Recommendations

This is a breakdown of recent ratings and price targets for PayPal and Jack Henry & Associates, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PayPal	6	32	8	0	2.04
Jack Henry & Associates	0	5	13	1	2.79

PayPal currently has a consensus price target of $55.94, indicating a potential downside of 5.09%. Jack Henry & Associates has a consensus price target of $190.00, indicating a potential upside of 5.04%. Given Jack Henry & Associates’ stronger consensus rating and higher possible upside, analysts clearly believe Jack Henry & Associates is more favorable than PayPal.

Volatility and Risk

PayPal has a beta of 1.33, suggesting that its share price is 33% more 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
PayPal	13.78%	24.39%	5.97%
Jack Henry & Associates	19.96%	24.38%	16.83%

Insider and Institutional Ownership

68.3% of PayPal shares are held by institutional investors. Comparatively, 98.8% of Jack Henry & Associates shares are held by institutional investors. 0.6% of PayPal shares are held by company insiders. Comparatively, 0.4% of Jack Henry & Associates shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

PayPal pays an annual dividend of $0.56 per share and has a dividend yield of 1.0%. Jack Henry & Associates pays an annual dividend of $2.44 per share and has a dividend yield of 1.3%. PayPal pays out 10.7% of its earnings in the form of a dividend. Jack Henry & Associates pays out 35.0% 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. Jack Henry & Associates has raised 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.

Earnings and Valuation

This table compares PayPal and Jack Henry & Associates”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PayPal	$34.30 billion	1.43	$5.23 billion	$5.24	11.25
Jack Henry & Associates	$2.54 billion	4.98	$502.78 million	$6.97	25.95

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

Summary

Jack Henry & Associates beats PayPal on 12 of the 18 factors compared between the two stocks.

About PayPal

PayPal Holdings, Inc. operates a technology platform that enables digital payments on behalf of merchants and consumers worldwide. It operates a two-sided network at scale that connects merchants and consumers that enables its customers to connect, transact, and send and receive payments through online and in person, as well as transfer and withdraw funds using various funding sources, such as bank accounts, PayPal or Venmo account balance, PayPal and Venmo branded credit products comprising its installment products, credit and debit cards, and cryptocurrencies, as well as other stored value products, including gift cards and eligible rewards. The company provides payment solutions under the PayPal, PayPal Credit, Braintree, Venmo, Xoom, Zettle, Hyperwallet, Honey, and Paidy names. The company was founded in 1998 and is headquartered in San Jose, California.

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.