- If you are wondering whether Tyler Technologies is starting to look interesting at its current share price, this article will walk through what the numbers are saying about value.
- The stock closed at US$349.79 most recently, after a 6.6% decline over the last 7 days, a 3.1% gain over 30 days, and returns of 19.7% decline year to date and 37.9% decline over the past year. The 3 year and 5 year returns sit at 7.1% and 16.7% decline respectively.
- Recent coverage has continued to focus on Tyler Technologies as a key player in public sector software, with attention on how governments are using digital tools for everything from courts to public safety. This backdrop helps frame how investors may be reassessing both the growth potential and risks around the stock price moves you are seeing.
- Right now, Tyler Technologies scores 2 out of 6 on our valuation checks, as shown in this valuation score. Next we will walk through the different valuation methods behind that figure, before finishing with a more complete way to think about what the stock might be worth.
Tyler Technologies scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: Tyler Technologies Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model estimates what a business could be worth today by projecting its future cash flows and then discounting those back to the present using a required return. It is essentially asking what the stream of future cash Tyler Technologies might generate is worth in today's dollars.
For Tyler Technologies, the model uses a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow stands at about $604.2 million. Analyst and extrapolated projections in the model suggest free cash flow figures rising into the $600 million to $1.4 billion range over the next decade, with Simply Wall St extending estimates beyond the initial analyst horizon.
On this basis, the DCF model arrives at an estimated intrinsic value of about $454.84 per share, compared with the recent share price of $349.79. That gap implies Tyler Technologies is trading at roughly a 23.1% discount to the DCF estimate. The model interprets this as undervaluation at current levels.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Tyler Technologies is undervalued by 23.1%. Track this in your watchlist or portfolio, or discover 48 more high quality undervalued stocks.
Approach 2: Tyler Technologies Price vs Earnings
For a profitable company like Tyler Technologies, the P/E ratio is a useful shorthand for how much investors are paying for each dollar of earnings. It lets you quickly compare what the market is paying for this earnings stream against other software names and the wider market.
A higher or lower P/E often reflects what investors expect for future growth and how much risk they see in those earnings. Stronger expected growth or lower perceived risk can support a higher P/E, while more uncertainty or weaker expectations can anchor that multiple closer to, or below, market and industry norms.
Tyler Technologies is currently trading on a P/E of 47.64x. That sits above the Software industry average of about 27.80x and the peer average of 43.56x. Simply Wall St’s Fair Ratio for Tyler Technologies is 28.38x. This Fair Ratio is a proprietary estimate of what the P/E could be given the company’s earnings growth profile, industry, profit margins, market cap and risk factors.
Because it adjusts for those company specific drivers, the Fair Ratio can be more informative than a simple comparison with peers or the industry average. Set against the current P/E of 47.64x, the Fair Ratio of 28.38x indicates that the shares are trading above that modelled level.
Result: OVERVALUED
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Upgrade Your Decision Making: Choose your Tyler Technologies Narrative
Earlier we mentioned that there is an even better way to understand what all these valuation checks mean. On Simply Wall St that comes through Narratives, which let you spell out your story for Tyler Technologies, connect that story to specific revenue, earnings and margin assumptions, and automatically link it to a Fair Value that you can compare with the current share price, all inside the Community page used by millions of investors.
Think of a Narrative as your personal Tyler Technologies playbook. It is where you explain why you think, for example, the company belongs closer to a bearish Fair Value of about US$510 per share or a bullish Fair Value of about US$800 per share. The platform then keeps that view updated as new news, earnings and analyst estimates are reflected in the numbers so that your investment decisions are always anchored to a live, story driven valuation rather than a static ratio.
Do you think there's more to the story for Tyler Technologies? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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