Constellation Software (CSU) AI Stock Analysis

• Market Cap: C$97.59B
• Dividend Yield: 0.12%
• Average Volume (3M): 48.42K
• Price to Earnings (P/E): 97.5
• Beta (1Y): 1.10
• Revenue Growth: 21.56%
• EPS Growth: 31.90%
• Country: CA
• Employees: 45,000
• Sector: Technology
• Sector Strength: 44
• Industry: Software - Application
• EPS (TTM): 47.40
• Shares Outstanding: 21,191,530
• 10 Day Avg. Volume: 49,894
• 30 Day Avg. Volume: 48,420
• PEG Ratio: 3.05
• Price to Book (P/B): N/A
• Price to Sales (P/S): 9.22
• Price to Cash Flow (P/CF): 33.90
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$5,491.67
• Price Target Upside: 18.25% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6

Constellation Software's overall score is driven by strong financial performance and strategic corporate actions. Despite robust revenue growth and cash flow management, high leverage and valuation concerns temper the outlook. Technical indicators offer mixed signals, while recent corporate events provide both strategic advantages and potential downsides. The overall score reflects a solid but cautious investment opportunity.

Positive Factors

Financial Health

Cash flow was significantly higher than consensus, showing strong financial health.

Management and Leadership

Constellation is considered very well-managed with a strong balance sheet, mitigating potential risks.

Mergers and Acquisitions

M&A activity was stronger than expected, indicating a proactive growth strategy by the company.

Negative Factors

Growth Challenges

A slight organic recurring revenue deceleration was noted, which could indicate potential challenges in maintaining consistent growth.

Revenue and Earnings

CSU missed on revenues and EPS, and the miss is uniquely due to elevated expectations.

Revenue Performance

Revenue and EBITDA were 1% light compared to consensus.

Constellation Software Business Overview & Revenue Model

Company Description

Constellation Software Inc. (CSU) is a leading global provider of software and services, headquartered in Toronto, Canada. The company operates in various sectors including public and private markets, offering specialized, mission-critical software solutions. Constellation Software's core products and services are designed to support a wide range of industries, from healthcare and retail to financial services and transportation, enabling organizations to enhance their operational efficiency and customer engagement.

How the Company Makes Money

Constellation Software makes money through a diversified revenue model primarily based on the acquisition and management of vertical market software companies. The company generates income through the sale of software licenses, maintenance and support services, and professional services such as training and consulting. A significant portion of its revenue also comes from subscription-based models, which provide a steady and recurring income stream. Additionally, Constellation Software's strategy of acquiring and nurturing smaller software businesses allows it to expand its market reach and increase its revenue base. The company's focus on niche markets and its ability to integrate and grow acquired companies are key factors contributing to its financial success.

Constellation Software Financial Statement Overview

Summary

Constellation Software demonstrates strong financial health with consistent revenue growth and efficient cash flow management. The company maintains high profitability margins and operational efficiency, although its high debt levels pose potential risks. Overall, the financials depict a company with a strong growth trajectory and sound operational practices, albeit with some leverage-related risks.

Income Statement

Constellation Software has showcased consistent revenue growth over the years, with a remarkable year-over-year increase of 19.76% from 2023 to 2024. The Gross Profit Margin stands strong at 88.81% in 2024, indicating efficient cost management. Although the Net Profit Margin is at 7.26%, which is moderate, the absence of EBIT in 2024 could be a concern for future profitability analysis. The EBITDA Margin of 24.69% suggests healthy operational efficiency.

Balance Sheet

The company's Debt-to-Equity Ratio of 1.62 in 2024 highlights a higher reliance on debt financing, which could be risky in volatile markets. However, a Return on Equity of 26.16% indicates strong profitability relative to shareholder equity. The Equity Ratio at 21.73% suggests that a significant portion of the company’s assets is financed by equity, which is a stable position.

Cash Flow

Constellation Software shows robust cash flow management, with a Free Cash Flow growth rate of 22.57% from 2023 to 2024. The Operating Cash Flow to Net Income Ratio of 3.00 suggests that the company generates substantial cash from operations relative to its net income. The Free Cash Flow to Net Income Ratio of 2.91 further emphasizes strong cash-generating capabilities, ensuring liquidity and flexibility.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
10.07B	8.40B	6.62B	5.11B	3.97B
	Gross Profit
8.94B	7.44B	5.86B	4.58B	3.54B
	EBIT
0.00	1.18B	764.00M	436.00M	656.00M
	EBITDA
2.48B	1.45B	1.63B	1.07B	1.15B
	Net Income Common Stockholders
731.00M	565.00M	512.00M	168.00M	436.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.99B	1.30B	926.00M	802.00M	767.00M
	Total Assets
12.86B	10.90B	7.88B	5.77B	4.38B
	Total Debt
4.53B	3.68B	2.29B	1.39B	725.00M
	Net Debt
2.55B	2.40B	1.48B	624.00M	-33.00M
	Total Liabilities
9.58B	8.94B	5.95B	4.25B	3.33B
	Stockholders Equity
2.79B	1.88B	1.71B	1.06B	1.05B
Cash Flow		Free Cash Flow
2.13B	1.74B	1.26B	1.27B	1.16B
	Operating Cash Flow
2.20B	1.78B	1.30B	1.30B	1.19B
	Investing Cash Flow
-1.57B	-1.64B	-1.69B	-1.24B	-512.00M
	Financing Cash Flow
114.00M	316.00M	483.00M	-41.00M	-247.00M

Constellation Software Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 4644.13
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CSU, the sentiment is Positive. The current price of 4644.13 is above the 20-day moving average (MA) of 4572.11, below the 50-day MA of 4725.33, and above the 200-day MA of 4473.90, indicating a neutral trend. The MACD of -15.66 indicates Negative momentum. The RSI at 51.09 is Neutral, neither overbought nor oversold. The STOCH value of 82.01 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:CSU.

Constellation Software Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TOI	77 Outperform	C$12.73B	92.99	28.52%	―	16.90%	28.86%
ENGH	72 Outperform	$1.32B	15.55	14.76%	4.33%	8.11%	15.83%
CSU	71 Outperform	C$97.59B	97.45	30.90%	0.12%	21.56%	31.90%
OTEX	68 Neutral	$9.23B	10.35	16.00%	4.15%	-3.59%	432.46%
KXS	68 Neutral	C$4.88B	157.81	-0.10%	―	14.85%	-105.25%
CMG	68 Neutral	C$624.87M	25.30	33.92%	2.66%	32.49%	-0.20%
Sector *	58 Neutral	$9.99B	10.12	-6.46%	3.10%	7.47%	-11.60%

Constellation Software Corporate Events

Constellation Software to Release Q1 Results on May 12, 2025

Constellation Software Inc. announced it will release its first quarter results on May 12, 2025, after market close. The company has stopped holding conference calls for quarterly financial results and instead offers a Q&A facility on its website for shareholders to submit questions, aiming to provide ongoing access to information about its strategy and operations.

Spark’s Take on TSE:CSU Stock

According to Spark, TipRanks’ AI Analyst, TSE:CSU is a Neutral.

Constellation Software’s stock score is driven by strong financial performance, including consistent revenue growth and efficient cash flow management. However, the high P/E ratio and low dividend yield point to a high valuation, which may deter new investors. The technical analysis indicates a bearish trend, suggesting cautious optimism in the near term. The corporate events do not significantly alter the score as they are accounted for in financial and technical analyses.

To see Spark’s full report on TSE:CSU stock, click here.

Constellation Software and Subsidiaries Announce Virtual Annual Meetings

Constellation Software Inc., along with its subsidiaries Topicus.com Inc. and Lumine Group Inc., announced their upcoming annual general meetings scheduled for May 13, 2025, which will be conducted virtually via live audio webcast. Shareholders will have the opportunity to participate in a joint question and answer session with senior management following the meetings. This approach reflects the companies’ ongoing commitment to engaging with stakeholders and adapting to digital formats, potentially enhancing shareholder participation and transparency.

Spark’s Take on TSE:CSU Stock

According to Spark, TipRanks’ AI Analyst, TSE:CSU is a Neutral.

Constellation Software’s stock score is driven by strong financial performance, including consistent revenue growth and efficient cash flow management. However, the high P/E ratio and low dividend yield point to a high valuation, which may deter new investors. The technical analysis indicates a bearish trend, suggesting cautious optimism in the near term. The corporate events do not significantly alter the score as they are accounted for in financial and technical analyses.

To see Spark’s full report on TSE:CSU stock, click here.

Constellation Software to Release Q4 Results and Enhance Investor Engagement

Constellation Software Inc., a company specializing in vertical market software businesses, announced it will release its fourth quarter results on March 7, 2025. The company will provide the results on its website and the SEDAR website after market close, opting out of the traditional conference calls. Instead, Constellation has implemented an online Q&A platform for shareholders to submit questions, aiming to enhance investor access to company information and strategies.

Constellation and Topicus Bolster Stake in Asseco Poland

Constellation Software Inc. and Topicus.com Inc. have announced that Topicus’ subsidiary, Yukon Niebieski Kapital B.V., has agreed to purchase 12,318,863 treasury shares from Asseco Poland S.A., representing 14.84% of its share capital, at PLN 85 per share. This strategic transaction will enhance Topicus’ influence in Asseco as it follows a previous acquisition of 9.99% shares and is supported by a shareholders’ agreement with the Adam Góral Family Foundation, pending regulatory approvals.