Right now, Jack Henry & Associates Inc. JKHY share price is at $172.80, after a 0.52% drop. Over the past month, the stock spiked by 1.27%, but over the past year, it actually fell by 11.09%. With questionable short-term performance like this, and great long-term performance, long-term shareholders might want to start looking into the company's price-to-earnings ratio.

The stock is currently above its 52 week low by 21.99%. Assuming that all other factors are held constant, this could present itself as an opportunity for investors trying to diversify their portfolio with IT Services stocks, and capitalize on the lower share price observed over the year.

The P/E ratio is used by long-term shareholders to assess the company's market performance against aggregate market data, historical earnings, and the industry at large. A lower P/E can either represent a company's poor future earnings potential or a buying opportunity relative to other stocks. It shows that shareholders are less than willing to pay a high share price, because they do not expect the company to exhibit growth, in terms of future earnings.

Most often, an industry will prevail in a particular phase of a business cycle, than other industries.

Compared to the aggregate P/E ratio of the 110.45 in the IT Services industry, Jack Henry & Associates Inc. has a lower P/E ratio of 44.77. Shareholders might be inclined to think that the stock might perform worse than its industry peers. It's also possible that the stock is undervalued.

There are many limitations to price to earnings ratio. It is sometimes difficult to determine the nature of the earnings makeup of a company. Shareholders might not get what they're looking for, from trailing earnings.