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Tyler Technologies (TYL) Faces A 144% Fair Value Gap After ERP Deal And Q3 Growth

Simply Wall St · 2d ago

Why Tyler Technologies Stock Is Back In Focus

Tyler Technologies (TYL) is back on investors’ radar after securing a statewide ERP deal with the West Virginia Department of Education and reporting third quarter revenue and net income growth in late October.

That backdrop helps explain why Tyler Technologies’ share price has surged, with a 30 day return of 27.62% and a 90 day share price gain of 31.99%, even as the 1 year total shareholder return is down 9.25% and the 5 year total shareholder return is down 23.56%. This points to momentum building recently after a tougher, longer stretch for investors.

Scan for other government and education software players showing similar contract momentum and financial progress using our hand picked list of solid balance sheet and fundamentals (25 results) as a starting universe.

Tyler Technologies looks like a firmly positioned public sector software specialist after its latest contract wins and earnings report. After a near 32% 90 day run, the harder question is whether that strength is already in the price.

Most Popular Narrative: 144% Overvalued

Tyler Technologies last closed at $420.56, while the most followed narrative on Simply Wall St pegs fair value closer to $172.63 using its own cash flow and margin assumptions. That gap frames the current rally as a valuation debate rather than a simple momentum story.

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.

See why 8 investors see Tyler Technologies as 144% overvalued.

Result: Fair Value of $172.63 (OVERVALUED)

Still, the Tyler Technologies narrative can break if the on premises to cloud migration stalls, or if stock based compensation and goodwill keep climbing and squeeze future flexibility.

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

Another View On Tyler Technologies’ Valuation

The community narrative tags Tyler Technologies as heavily overvalued at a fair value of $172.63, yet Simply Wall St’s own DCF work points in a very different direction. At a recent price of $420.56, the SWS DCF model suggests fair value closer to $565.03, which implies the stock trades about 25.6% below that estimate. The gap between those two views comes down to what investors believe about future cash flows and how much certainty they need.

For readers who want to see the full cash flow path and key levers behind that number, take a closer look at how the SWS DCF model works on Tyler Technologies with Look into how the SWS DCF model arrives at its fair value.

TYL Discounted Cash Flow as at Nov 2026
TYL Discounted Cash Flow as at Nov 2026

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 36 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

Views on Tyler Technologies’ valuation are clearly split, which is exactly why your own work matters. Move fast, stress test the assumptions that matter to you, and then drill into the company’s 3 key rewards

Looking for more investment ideas beyond Tyler Technologies?

Tyler Technologies might be your starting point, but you do not want your watchlist to stop there. Fresh ideas often show up where fewer people are looking.