Shareholders of Tyler Technologies, Inc. (NYSE:TYL) will be pleased this week, given that the stock price is up 14% to US$461 following its latest first-quarter results. Revenues were US$512m, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$1.26 were also better than expected, beating analyst predictions by 14%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, the current consensus from Tyler Technologies' 19 analysts is for revenues of US$2.13b in 2024. This would reflect a modest 6.7% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to leap 21% to US$5.40. In the lead-up to this report, the analysts had been modelling revenues of US$2.12b and earnings per share (EPS) of US$5.16 in 2024. So the consensus seems to have become somewhat more optimistic on Tyler Technologies' earnings potential following these results.
The consensus price target was unchanged at US$494, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Tyler Technologies analyst has a price target of US$529 per share, while the most pessimistic values it at US$444. This is a very narrow spread of estimates, implying either that Tyler Technologies is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Tyler Technologies' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 9.1% growth on an annualised basis. This is compared to a historical growth rate of 16% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 13% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Tyler Technologies.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Tyler Technologies following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$494, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Tyler Technologies analysts - going out to 2026, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for Tyler Technologies that you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.