It’s been a good week for Tyler Technologies, Inc. (NYSE:TYL) shareholders, because the company has just released its latest annual results, and the shares gained 2.6% to US$338. The result was positive overall – although revenues of US$1.1b were in line with what analysts predicted, Tyler Technologies surprised by delivering a statutory profit of US$3.65 per share, modestly greater than expected. This is an important time for investors, as they can track a company’s performance in its report, look at what top analysts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see analysts’ latest (statutory) post-earnings forecasts for next year.
Following the latest results, Tyler Technologies’s eleven analysts are now forecasting revenues of US$1.21b in 2020. This would be a notable 12% improvement in sales compared to the last 12 months. Statutory per share are forecast to be US$3.80, approximately in line with the last 12 months. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.21b and earnings per share (EPS) of US$4.37 in 2020. So there’s definitely been a decline in analyst sentiment after the latest results, noting the real cut to new EPS forecasts.
Although analysts have revised their earnings forecasts for next year, they’ve also lifted the consensus price target 22% to US$340, suggesting the revised estimates are not indicative of a weaker long-term future for the business. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company’s valuation. There are some variant perceptions on Tyler Technologies, with the most bullish analyst valuing it at US$380 and the most bearish at US$285 per share. The narrow spread of estimates could suggest that the business’ future is relatively easy to value, or that analysts have a clear view on its prospects.
Further, we can compare these estimates to past performance, and see how Tyler Technologies forecasts compare to the wider market’s forecast performance. It’s pretty clear that analysts expect Tyler Technologies’s revenue growth will slow down substantially, with revenues next year expected to grow 12%, compared to a historical growth rate of 15% over the past five years. Compare this to the other companies in this market with analyst coverage, which are forecast to grow their revenue at 12% per year. So it’s pretty clear that, while Tyler Technologies’s revenue growth is expected to slow, it’s expected to grow roughly in line with the industry.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Tyler Technologies. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
Still, the long-term prospects of the business are much more relevant than next year’s earnings. At Simply Wall St, we have a full range of analyst estimates for Tyler Technologies going out to 2022, and you can see them free on our platform here..
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.