TYL

Based on the provided analysis, here is a comprehensive assessment of Tyler Technologies (TYL).

Technical Analysis TYL is in a clear bearish trend, trading near its 52-week low and having significantly underperformed the market. While this suggests the stock is technically oversold and may be due for a rebound, the underlying momentum remains weak. A sustained recovery would require a clear catalyst to improve market sentiment.

Fundamental Analysis The company’s fundamentals are solid, characterized by robust profitability, healthy margins, and a very strong balance sheet with minimal debt. However, operational efficiency metrics like Return on Equity (2.3%) are relatively low, indicating that the company’s use of capital could be more effective. Financially, TYL is on a very stable footing.

Valuation & Risk The primary concern is the stock's extremely rich valuation. With a forward P/E over 66 and an EV/EBITDA multiple above 160, TYL is priced for near-perfect execution of aggressive growth expectations. This leaves little room for error and presents a high risk of a valuation compression if growth slows. While systematic risk (beta) is low, the stock has proven susceptible to significant drawdowns.

Buy Recommendation

Tyler Technologies possesses an excellent business model with strong profitability and a pristine balance sheet. However, the current investment case is challenging; the stock's premium valuation already prices in exceptional future growth, while its recent technical performance shows significant weakness. For a new investment, it may be prudent to wait for either a more attractive valuation or a clear technical reversal confirming that the bearish trend has exhausted itself. This stock is better suited for watchlists than immediate action.

*Note: This is not investment advice, for reference only.*

RockFlow Model Forecast: Three Scenarios for 2026

Based on the comprehensive analysis, the 12-month outlook for Tyler Technologies (TYL) is cautious. The key catalyst for a recovery hinges on the company demonstrating that its growth can justify its premium valuation, likely through strong quarterly earnings that surpass high market expectations. The primary risk is valuation compression; even minor growth disappointments could trigger significant downside as the current price embeds near-perfect execution. While no specific analyst target is provided herein, the stock's extreme valuations suggest a wide potential range, with upward movement contingent on flawless fundamental performance and a reversal of the current bearish technical trend.

Wall Street Consensus

Most Wall Street analysts are optimistic about TYL's 12-month outlook, with consensus target around $452.00, indicating expected upside potential.

Overall, TYL has investment potential but also faces challenges. Here are key factors to weigh before investing.

Of course. Here is the technical analysis of TYL's price performance.

Overall Assessment TYL is currently in a pronounced bearish trend, having fallen substantially from its yearly peak and significantly underperforming the broader market over the recent quarter.

Short-term Performance The stock shows negative momentum across both short-term horizons, with a 1-month decline of -2.33% and a more severe 3-month drop of -12.5%. Critically, its -15.87% Relative Strength versus the market indicates it is not just falling but is lagging well behind the benchmark's performance during this period, signaling notable weakness. The beta of 0.916 confirms the stock has slightly less volatility than the market, suggesting these losses are a result of stock-specific factors rather than broader market swings.

Current Position Currently priced at $443.14, TYL is trading much closer to its 52-week low of $430 than its high of $661.31, placing it near the lower bounds of its annual range. Combined with a maximum drawdown of -32.61% over the past year, this positions the stock in an oversold territory, suggesting the majority of the negative momentum may already be priced in and potentially setting up for a technical rebound if sentiment improves.

Revenue & Profitability TYL demonstrates solid profitability with steady performance across recent quarters. The company maintained a robust net profit margin of 14.2% in Q3 2025, showing strong bottom-line conversion from its revenue base. Operating margins remained healthy at 16.4%, indicating effective cost management despite minor quarterly fluctuations.

Financial Health The company maintains a conservative capital structure with a low debt ratio of 11.8% and minimal interest obligations. Strong cash generation is evident with operating cash flow per share of $5.93 and substantial cash reserves of $22.08 per share, providing significant financial flexibility. The current ratio of 1.03 indicates adequate short-term liquidity coverage.

Operational Efficiency TYL's operational metrics show room for improvement, with return on equity at 2.3% and asset turnover of 0.11 suggesting modest capital utilization efficiency. However, the company demonstrates strong cash flow conversion with free cash flow representing 98.5% of operating cash flow. The 63-day cash conversion cycle indicates reasonable working capital management.

**Valuation Level**

Tyler Technologies (TYL) exhibits a valuation profile heavily reliant on growth expectations. The stock trades at a significant premium to the broader market, as evidenced by its elevated trailing and forward P/E ratios (62.15 and 66.73, respectively) and a high Price-to-Sales (P/S) ratio of 8.49. While the Price-to-Book (P/B) ratio of 5.25 is also high, the extreme EV/EBITDA multiple of approximately 160.8 is particularly striking, signaling that the market is pricing in exceptionally strong future cash flow growth. This combination suggests the stock is richly valued, with its price dependent on the company's ability to meet or exceed aggressive growth forecasts.

**Peer Comparison**

A direct comparison against specific industry averages is not possible with the provided data. However, the provided valuation multiples are exceptionally high by almost any standard, particularly for a mature software company. The P/S ratio near 8.5 and an EV/EBITDA over 160 would typically place TYL at the very top end of the valuation spectrum within the software industry, implying the market assigns it a substantial premium over most peers. This underscores that TYL's investment case is entirely predicated on the successful execution of its long-term growth strategy to justify these premium valuations.

Volatility Risk: With a beta of 0.916, TYL's price movements are slightly less volatile than the broader market, suggesting a moderate level of systematic risk. However, the stock has experienced a significant 1-year maximum drawdown of -32.61%, indicating it remains susceptible to substantial price declines during market downturns. This discrepancy highlights that while its day-to-day volatility is muted, the stock can still incur meaningful losses over a sustained period.

Other Risks: The absence of a notable short interest percentage suggests a general lack of negative speculative sentiment or identified fundamental weaknesses from sophisticated investors. While liquidity risk is generally manageable for larger-cap stocks like Tyler Technologies, the absence of other prevalent risks like high short interest does not preclude company-specific operational or execution risks inherent in the software sector.