Today we're going to take a look at the well-established Tyler Technologies, Inc. (NYSE:TYL). The company's stock received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$419 at one point, and dropping to the lows of US$321. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Tyler Technologies' current trading price of US$348 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Tyler Technologies’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
What Is Tyler Technologies Worth?
According to my valuation model, Tyler Technologies seems to be fairly priced at around 13.65% above my intrinsic value, which means if you buy Tyler Technologies today, you’d be paying a relatively fair price for it. And if you believe the company’s true value is $305.76, there’s only an insignificant downside when the price falls to its real value. What's more, Tyler Technologies’s share price may be more stable over time (relative to the market), as indicated by its low beta.
What does the future of Tyler Technologies look like?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Tyler Technologies' earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? TYL’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on TYL, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
If you want to dive deeper into Tyler Technologies, you'd also look into what risks it is currently facing. In terms of investment risks, we've identified 1 warning sign with Tyler Technologies, and understanding this should be part of your investment process.
If you are no longer interested in Tyler Technologies, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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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.
Tyler Technologies, Inc. provides integrated information management solutions and services for the public sector.
The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.
|Analysis Area||Score (0-6)|
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Proven track record with adequate balance sheet.