A Look At Tyler Technologies (TYL) Valuation After Solid Full Year Earnings Growth

Tyler Technologies (TYL) recently released its fourth quarter and full year 2025 results, reporting revenue and net income for both periods above the prior year. These results put the latest stock moves in the context of fresh fundamentals.

See our latest analysis for Tyler Technologies.

The earnings release appears to have landed against a weak backdrop, with a 30 day share price return of 27.08% and a 90 day share price return of 30.03%. At the same time, the 1 year total shareholder return of 48.47% and 5 year total shareholder return of 31.59% point to pressure on longer term holders.

If you are reassessing your tech exposure after these results, it could be worth broadening your watchlist with our screener of 22 top founder-led companies as potential next ideas to research.

With steady annual growth in both revenue and net income but sharp recent share price declines, the key question is whether Tyler Technologies is now trading below its underlying fundamentals or if the market is already pricing in additional growth from this point.

Most Popular Narrative: 47.4% Undervalued

Tyler Technologies latest close of $317.01 sits well below the most followed fair value estimate of $603.14. This puts a lot of weight on how its long term public sector story plays out.

The accelerating digital transformation initiatives across state and local governments are intensifying demand for cloud based, integrated solutions, which directly support Tyler's ongoing success in SaaS client migrations (cloud flips) and recurring revenue growth; this secular momentum is reflected in a pipeline of large deals and an expected 25% annual increase in cloud flips, translating to sustained double digit top line revenue expansion.

Read the complete narrative.

Want to see what is baked into that valuation gap? The narrative leans on compounding revenue, rising margins, and a rich earnings multiple that assumes continued execution. Curious which specific growth and profitability paths need to hold up to support that $603 fair value?

Result: Fair Value of $603.14 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, you also need to weigh the risk that government budget pressure or slower SaaS bookings and cloud flips could challenge those growth and margin assumptions.

Find out about the key risks to this Tyler Technologies narrative.

Another View: Multiples Paint a Tougher Picture

If you step away from fair value models and look at the simple earnings multiple, Tyler Technologies trades on a P/E of 43.2x. That is well above the US Software industry average of 25.4x, even though the fair ratio sits lower at 28.9x.

The stock does look cheaper than its peer group average P/E of 54.5x, but the gap to that 28.9x fair ratio suggests limited room for error if growth or margins fall short. Which signal do you trust more: the discounted cash flow value or the richer earnings multiple?

See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

Does this mix of optimism and caution fit how you see Tyler right now, or not quite? If you want to move quickly and ground your view in the underlying data, take a closer look at the balance of 3 key rewards and 1 important warning sign.

Looking for more investment ideas?

If Tyler has sharpened your focus, do not stop here. Broaden your watchlist with other ideas that match your risk comfort and income goals.

• Target safety first by scanning companies rated for resilience through our 87 resilient stocks with low risk scores so you are not relying on just one name to manage volatility.
• Hunt for potential mispricing by reviewing our 54 high quality undervalued stocks where solid fundamentals meet prices that may not fully reflect the underlying businesses.
• Build a cash flow anchor by checking out a curated group of income ideas in our 15 dividend fortresses before the next round of payouts passes you by.

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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