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It's been a good week for Tyler Technologies, Inc. (NYSE:TYL) shareholders, because the company has just released its latest full-year results, and the shares gained 9.7% to US$466. The result was positive overall - although revenues of US$1.1b were in line with what the analysts predicted, Tyler Technologies surprised by delivering a statutory profit of US$4.69 per share, modestly greater than expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus from Tyler Technologies' eleven analysts is for revenues of US$1.21b in 2021, which would reflect a notable 8.4% increase on its sales over the past 12 months. Statutory earnings per share are forecast to fall 15% to US$4.13 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$1.21b and earnings per share (EPS) of US$4.03 in 2021. So the consensus seems to have become somewhat more optimistic on Tyler Technologies' earnings potential following these results.
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 11% to US$465. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Tyler Technologies, with the most bullish analyst valuing it at US$500 and the most bearish at US$340 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
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 next year expected to grow 8.4%, compared to a historical growth rate of 12% 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 14% next year. Factoring in the forecast slowdown in growth, it seems obvious that Tyler Technologies is also expected to grow slower than other industry participants.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Tyler Technologies' earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Tyler Technologies' revenues are expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
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 forecasts for Tyler Technologies going out to 2023, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 3 warning signs for Tyler Technologies (of which 1 shouldn't be ignored!) you should know about.
This article by Simply Wall St is general in nature. 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.
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