Value
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 2.8 |
| P/S | 6.6 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 6.0 |
| PEG | 5.2 |
| Analyst target | 7.5 |
- ▸Forward P/E: 21.5x
- ▸PEG: 1.45
TYL · Why this verdict
Why Tyler Technologies (TYL) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.1/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Tyler Technologies converts 172% of net income into free cash flow, one of the highest ratios in the application software sector, reflecting the recurring subscription revenue model of its public sector software business. Quality breakdown | Free cash flow conversion remains above 120% of net income over the next four quarters as the subscription mix continues to grow. | →Stable |
| CounterHigh free cash flow relative to earnings can indicate that reported earnings are understated by non-cash charges, which could mean future earnings growth is already being front-run in the cash flow line. | ||
Analysts set a consensus price target of $399.13 against the current price of $289.84, implying 37.7% upside and reflecting confidence in the company's long-term revenue growth from government technology modernization spending. Targets | The stock closes the gap toward the analyst target by at least 15 percentage points over the next 12 months as momentum recovers. | →Stable |
| CounterThe death cross and a momentum score of only 1.9 out of 10 suggest the stock is deeply out of favor technically, and analyst targets in software can lag deteriorating fundamentals by several quarters. | ||
The company's revenues are highly concentrated in public sector clients, which creates a structural dependency on government budget cycles, procurement timelines, and political spending priorities that can delay contract awards unpredictably. Bear case | Revenue growth from public sector contracts stays above 8% annually, confirming that government modernization spending remains robust. | →Stable |
| CounterPublic sector clients provide highly recurring, sticky revenue once software is embedded in government workflows, reducing churn risk significantly compared to commercial software clients. | ||
The 50-day moving average has crossed below the 200-day moving average, and the 200-day moving average itself is declining at -8.7% per month, confirming a sustained downtrend in price that blocks near-term entry. Warnings | Price reclaims and holds above the 200-day moving average for at least 4 consecutive weeks within 12 months. | →Stable |
| CounterThe asymmetry ratio of 4.13 suggests the potential reward to risk is still strongly favorable if the thesis plays out, meaning disciplined buyers who wait for the technical reversal could capture an exceptional entry. | ||
Tyler Technologies converts 172% of net income into free cash flow, one of the highest ratios in the application software sector, reflecting the recurring subscription revenue model of its public sector software business.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 120% of net income over the next four quarters as the subscription mix continues to grow.
CounterHigh free cash flow relative to earnings can indicate that reported earnings are understated by non-cash charges, which could mean future earnings growth is already being front-run in the cash flow line.
Analysts set a consensus price target of $399.13 against the current price of $289.84, implying 37.7% upside and reflecting confidence in the company's long-term revenue growth from government technology modernization spending.
→StableTargets
- Expectation
- The stock closes the gap toward the analyst target by at least 15 percentage points over the next 12 months as momentum recovers.
CounterThe death cross and a momentum score of only 1.9 out of 10 suggest the stock is deeply out of favor technically, and analyst targets in software can lag deteriorating fundamentals by several quarters.
The company's revenues are highly concentrated in public sector clients, which creates a structural dependency on government budget cycles, procurement timelines, and political spending priorities that can delay contract awards unpredictably.
→StableBear case
- Expectation
- Revenue growth from public sector contracts stays above 8% annually, confirming that government modernization spending remains robust.
CounterPublic sector clients provide highly recurring, sticky revenue once software is embedded in government workflows, reducing churn risk significantly compared to commercial software clients.
The 50-day moving average has crossed below the 200-day moving average, and the 200-day moving average itself is declining at -8.7% per month, confirming a sustained downtrend in price that blocks near-term entry.
→StableWarnings
- Expectation
- Price reclaims and holds above the 200-day moving average for at least 4 consecutive weeks within 12 months.
CounterThe asymmetry ratio of 4.13 suggests the potential reward to risk is still strongly favorable if the thesis plays out, meaning disciplined buyers who wait for the technical reversal could capture an exceptional entry.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Tyler Technologies serves public sector clients with a software platform that generates 172% free cash flow conversion and has beaten earnings in 3 of 4 recent quarters, but a confirmed death cross, falling on-balance volume, and an elevated put/call ratio of 2.65 signal that price needs time and a catalyst before the 38% analyst upside becomes accessible.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.0 |
| ROA | 3.1 |
| Gross margin | 5.4 |
| Op margin | 6.8 |
| Net margin | 6.6 |
| Current ratio | 4.0 |
| FCF quality | 10.0 |
| Moat | 5.0 |
| Piotroski F | 7.8 |
- ▸Excellent cash conversion: 172% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
3.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.6 |
| EPS growth | 2.4 |
Momentum
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.9 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 1.9 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -9.2%/30d — confirmed downtrend
Sentiment
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.5 |
| Price target | 9.0 |
| erm sentiment | 5.4 |
- ▸Analyst upside: 38%
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
4.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.7 |
| quality rank | 5.7 |
| growth rank | 2.6 |
Technical
1.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.2 |
| support resistance | 0.4 |
| 52w position | 0.2 |
| gap | 5.0 |
Risk (lower is worse)
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 5.5 |
| days to cover | 6.8 |
| volatility | 2.2 |
| put call | 9.1 |
| implied vol | 3.1 |
| beta | 8.1 |
| debt equity | 4.3 |
- ▸High IV: 62%
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 3.5 |
- ▸Strong earnings: 3B/1M
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:6.4>=5.5
- ASYMMETRY:1.6>=1.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:26d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (2)
- DEATH_CROSS:momentum=6.4>=5.0 recovering
- 8K_FLAG:1.02
Reward-to-Risk
1.60
Upside
+23.8%
Downside
14.9%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 61
EdgeCatalyst-Driven — Earnings in 26d with 3/4 beat streak
SuitabilitySpeculative — Drawdown -49% (>40% off 52w high)
Investment implication
The F-path SELL output reflects an overall score of 4.6 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Sentiment at 7.4) was not enough to lift the adjusted overall above the threshold. Current asymmetry R:R is 1.60 — supplementary context, not the trigger for this path.
The strongest dimensions are Sentiment at 7.4, Momentum at 6.4, and Quality at 5.7; the weakest are Technical at 1.4, Growth at 3.5, and Peer rank at 4.5. The V9 engine cleared all gates with 2 warnings, producing an asymmetric reward-to-risk of 1.60 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Exceptional Free Cash Conversion
Trip ifFree cash flow conversion falls below 100% of net income for 2 consecutive quarters, signaling the subscription model is generating less cash than historical norms.
- P2Analyst Upside 38 Pct
Trip ifAnalyst consensus price target falls below $330, more than 17% below the current $399.13 target, indicating a broad downward revision in expectations.
- P3Death Cross Confirmed Downtrend
Trip ifPrice falls below $260, more than 10% below the current $289.84, as the downtrend accelerates beyond the current support zone.
- P4Public Sector Concentration Risk
Trip ifRevenue growth falls below 5% year over year for 2 consecutive quarters, indicating public sector spending momentum has slowed materially.