Tyler Technologies (TYL) has drawn fresh attention after recent share price moves, with the stock up about 3% over the past week and roughly 15% over the past month, prompting closer scrutiny from investors.

Zooming out, Tyler Technologies has a 30 day share price return of 14.56%, but the share price is still down 26.69% year to date and the 1 year total shareholder return has declined 43.39%. This points to recent momentum rebuilding after a prolonged weaker spell.

If recent moves in Tyler Technologies have you rethinking where growth could come from next, it may be worth scanning for other opportunities through our screener of 18 top founder-led companies

Tyler Technologies looks like a solid public sector software business, yet the stock’s sharp recent rebound after a weaker year raises a different issue. Are you now paying a fair price for that quality, or stretching for it?

Most Popular Narrative: 120.4% Overvalued

Tyler Technologies last closed at $319.51, while the most followed narrative from Esteban places fair value at $144.97 using an 8.57% discount rate. That gap sets up a very different view from the recent rebound in the share price.

Tyler Technologies is the dominant software platform for U.S. state and local government, a market defined by mission-critical workflows, 12 to 24 month implementation cycles, and a procurement environment that structurally protects incumbents. The investment thesis is built on three compounding forces: (1) a largely complete SaaS cloud transition that is converting a high-gross-margin subscription base from flat to accelerating, with ARR already at $2.06B and growing 11% annually; (2) a payments platform (NIC) that turns Tyler’s 40,000+ client relationships into a recurring transaction revenue stream now generating $808M per year and growing at double digits; and (3) a Tyler 2030 strategic roadmap that articulates a credible path to 30%+ non-GAAP operating margins by the end of the decade.

Want to see how those subscription, payments and margin assumptions connect to that fair value gap? The narrative leans on a specific growth path and profitability profile. The interesting part is how those moving pieces are sequenced across the coming years.

Result: Fair Value of $144.97 (OVERVALUED)

However, Tyler Technologies still faces two clear swing factors: slower on-premises to cloud migration, and any stumble in capital allocation discipline, especially around stock-based compensation.

Another View: SWS DCF Model Sees Tyler Technologies Differently

Esteban’s narrative points to Tyler Technologies looking overvalued at $319.51 versus a fair value of $144.97, but our DCF model tells a different story. On that framework, Tyler Technologies is trading about 41.7% below an estimated fair value of $547.93, which presents the current price as a potential discount. Which set of assumptions do you find more convincing?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Tyler Technologies for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 47 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If the mixed signals around Tyler Technologies have you on the fence, now is a good time to look through the numbers yourself and test both narratives against your own expectations, then weigh those findings against the 4 key rewards

Looking for more investment ideas beyond Tyler Technologies?

Do not stop with Tyler Technologies. Broaden your watchlist now, compare different return and risk profiles, and avoid missing out on opportunities that fit your style.

• Target potential mispricing by scanning companies that screen as 47 high quality undervalued stocks based on strong cash flows and balance sheets.
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• Hunt for under-the-radar opportunities with the screener containing 20 high quality undiscovered gems that most investors might not be watching yet.

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.