CONSTELLATION SOFTWARE INC (CSU.CA) Stock Fundamental Analysis
TSX:CSU - Toronto Stock Exchange - CA21037X1006 - Common Stock - Currency: CAD
Overall CSU gets a fundamental rating of 6 out of 10. We evaluated CSU against 61 industry peers in the Software industry. While CSU has a great profitability rating, there are some minor concerns on its financial health. CSU is showing excellent growth while it is valued at reasonable prices. Keep and eye on this one!
1. Profitability
1.1 Basic Checks
In the past year CSU was profitable.
In the past year CSU had a positive cash flow from operations.
Each year in the past 5 years CSU has been profitable.
CSU had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of 5.33%, CSU is in the better half of the industry, outperforming 75.41% of the companies in the same industry.
Looking at the Return On Equity, with a value of 24.33%, CSU belongs to the top of the industry, outperforming 85.25% of the companies in the same industry.
CSU has a better Return On Invested Capital (8.78%) than 78.69% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for CSU is below the industry average of 12.52%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.33% | ||
| ROE | 24.33% | ||
| ROIC | 8.78% |
ROA(3y)5.8%
ROA(5y)6.55%
ROE(3y)28.73%
ROE(5y)31.4%
ROIC(3y)10.12%
ROIC(5y)11.52%
1.3 Margins
With a decent Profit Margin value of 7.15%, CSU is doing good in the industry, outperforming 73.77% of the companies in the same industry.
In the last couple of years the Profit Margin of CSU has declined.
The Operating Margin of CSU (14.81%) is better than 80.33% of its industry peers.
In the last couple of years the Operating Margin of CSU has remained more or less at the same level.
Looking at the Gross Margin, with a value of 98.31%, CSU belongs to the top of the industry, outperforming 98.36% of the companies in the same industry.
CSU's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 14.81% | ||
| PM (TTM) | 7.15% | ||
| GM | 98.31% |
OM growth 3Y-4.63%
OM growth 5Y-0.13%
PM growth 3Y6.15%
PM growth 5Y-5.31%
GM growth 3Y0.09%
GM growth 5Y0.25%
2. Health
2.1 Basic Checks
CSU has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
CSU has about the same amout of shares outstanding than it did 1 year ago.
Compared to 5 years ago, CSU has about the same amount of shares outstanding.
Compared to 1 year ago, CSU has a worse debt to assets ratio.
2.2 Solvency
An Altman-Z score of 5.44 indicates that CSU is not in any danger for bankruptcy at the moment.
CSU has a Altman-Z score of 5.44. This is in the better half of the industry: CSU outperforms 78.69% of its industry peers.
The Debt to FCF ratio of CSU is 2.13, which is a good value as it means it would take CSU, 2.13 years of fcf income to pay off all of its debts.
CSU has a better Debt to FCF ratio (2.13) than 67.21% of its industry peers.
A Debt/Equity ratio of 1.25 is on the high side and indicates that CSU has dependencies on debt financing.
CSU has a worse Debt to Equity ratio (1.25) than 70.49% of its industry peers.
Although CSU does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.25 | ||
| Debt/FCF | 2.13 | ||
| Altman-Z | 5.44 |
ROIC/WACC0.95
WACC9.25%
2.3 Liquidity
A Current Ratio of 0.94 indicates that CSU may have some problems paying its short term obligations.
Looking at the Current ratio, with a value of 0.94, CSU is doing worse than 60.66% of the companies in the same industry.
A Quick Ratio of 0.93 indicates that CSU may have some problems paying its short term obligations.
CSU has a worse Quick ratio (0.93) than 60.66% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.94 | ||
| Quick Ratio | 0.93 |
3. Growth
3.1 Past
CSU shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 46.44%, which is quite impressive.
Measured over the past years, CSU shows a very strong growth in Earnings Per Share. The EPS has been growing by 24.67% on average per year.
The Revenue has grown by 17.26% in the past year. This is quite good.
CSU shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 23.60% yearly.
EPS 1Y (TTM)46.44%
EPS 3Y24.73%
EPS 5Y24.67%
EPS Q2Q%3.19%
Revenue 1Y (TTM)17.26%
Revenue growth 3Y25.39%
Revenue growth 5Y23.6%
Sales Q2Q%12.74%
3.2 Future
The Earnings Per Share is expected to grow by 15.17% on average over the next years. This is quite good.
Based on estimates for the next years, CSU will show a quite strong growth in Revenue. The Revenue will grow by 19.45% on average per year.
EPS Next Y10.67%
EPS Next 2Y15.17%
EPS Next 3YN/A
EPS Next 5YN/A
Revenue Next Year19.19%
Revenue Next 2Y18.36%
Revenue Next 3Y19.45%
Revenue Next 5Y19.45%
3.3 Evolution
The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
Based on the Price/Earnings ratio of 39.44, the valuation of CSU can be described as expensive.
Based on the Price/Earnings ratio, CSU is valued a bit cheaper than 73.77% of the companies in the same industry.
CSU is valuated rather expensively when we compare the Price/Earnings ratio to 26.82, which is the current average of the S&P500 Index.
The Price/Forward Earnings ratio is 29.91, which means the current valuation is very expensive for CSU.
Based on the Price/Forward Earnings ratio, CSU is valued a bit cheaper than the industry average as 75.41% of the companies are valued more expensively.
When comparing the Price/Forward Earnings ratio of CSU to the average of the S&P500 Index (36.21), we can say CSU is valued inline with the index average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 39.44 | ||
| Fwd PE | 29.91 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, CSU is valued a bit cheaper than the industry average as 65.57% of the companies are valued more expensively.
70.49% of the companies in the same industry are more expensive than CSU, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 32.64 | ||
| EV/EBITDA | 27.01 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates CSU does not grow enough to justify the current Price/Earnings ratio.
CSU has a very decent profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as CSU's earnings are expected to grow with 15.17% in the coming years.
PEG (NY)3.69
PEG (5Y)1.6
EPS Next 2Y15.17%
EPS Next 3YN/A
5. Dividend
5.1 Amount
With a yearly dividend of 0.12%, CSU is not a good candidate for dividend investing.
CSU's Dividend Yield is rather good when compared to the industry average which is at 1.67. CSU pays more dividend than 90.16% of the companies in the same industry.
With a Dividend Yield of 0.12, CSU pays less dividend than the S&P500 average, which is at 2.35.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.12% |
5.2 History
The dividend of CSU decreases each year by -30.08%.
CSU has paid a dividend for at least 10 years, which is a reliable track record.
CSU has not decreased its dividend for at least 10 years, so it has a reliable track record of non decreasing dividend.
Dividend Growth(5Y)-30.08%
Div Incr Years0
Div Non Decr Years17
5.3 Sustainability
11.47% of the earnings are spent on dividend by CSU. This is a low number and sustainable payout ratio.
DP11.47%
EPS Next 2Y15.17%
EPS Next 3YN/A
TSX:CSU (8/1/2025, 7:00:00 PM)
4718.31
-61.97 (-1.3%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners40.24%
Inst Owner ChangeN/A
Ins Owners2.12%
Ins Owner ChangeN/A
Market Cap99.98B
Analysts78.67
Price Target5678.34 (20.35%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.12% |
Yearly Dividend5.49
Dividend Growth(5Y)-30.08%
DP11.47%
Div Incr Years0
Div Non Decr Years17
Ex-Date
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)1.7%
Min EPS beat(2)-22.05%
Max EPS beat(2)25.45%
EPS beat(4)2
Avg EPS beat(4)1.96%
Min EPS beat(4)-22.05%
Max EPS beat(4)25.45%
EPS beat(8)3
Avg EPS beat(8)-4.19%
EPS beat(12)6
Avg EPS beat(12)3.53%
EPS beat(16)8
Avg EPS beat(16)-0.7%
Revenue beat(2)0
Avg Revenue beat(2)-3.38%
Min Revenue beat(2)-4.77%
Max Revenue beat(2)-1.99%
Revenue beat(4)0
Avg Revenue beat(4)-2.62%
Min Revenue beat(4)-4.77%
Max Revenue beat(4)-1.4%
Revenue beat(8)1
Avg Revenue beat(8)-1.64%
Revenue beat(12)3
Avg Revenue beat(12)-1.01%
Revenue beat(16)3
Avg Revenue beat(16)-1.04%
PT rev (1m)0%
PT rev (3m)7.43%
EPS NQ rev (1m)0%
EPS NQ rev (3m)4.31%
EPS NY rev (1m)0%
EPS NY rev (3m)0%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-1.26%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 39.44 | ||
| Fwd PE | 29.91 | ||
| P/S | 6.97 | ||
| P/FCF | 32.64 | ||
| P/OCF | 31.61 | ||
| P/B | 23.72 | ||
| P/tB | N/A | ||
| EV/EBITDA | 27.01 |
EPS(TTM)119.64
EY2.54%
EPS(NY)157.76
Fwd EY3.34%
FCF(TTM)144.57
FCFY3.06%
OCF(TTM)149.28
OCFY3.16%
SpS676.97
BVpS198.9
TBVpS-289.35
PEG (NY)3.69
PEG (5Y)1.6
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.33% | ||
| ROE | 24.33% | ||
| ROCE | 17.76% | ||
| ROIC | 8.78% | ||
| ROICexc | 12.33% | ||
| ROICexgc | N/A | ||
| OM | 14.81% | ||
| PM (TTM) | 7.15% | ||
| GM | 98.31% | ||
| FCFM | 21.36% |
ROA(3y)5.8%
ROA(5y)6.55%
ROE(3y)28.73%
ROE(5y)31.4%
ROIC(3y)10.12%
ROIC(5y)11.52%
ROICexc(3y)13.25%
ROICexc(5y)15.63%
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)20.46%
ROCE(5y)23.3%
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3Y-11.6%
ROICexc growth 5Y-7.15%
OM growth 3Y-4.63%
OM growth 5Y-0.13%
PM growth 3Y6.15%
PM growth 5Y-5.31%
GM growth 3Y0.09%
GM growth 5Y0.25%
F-Score8
Asset Turnover0.75
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.25 | ||
| Debt/FCF | 2.13 | ||
| Debt/EBITDA | 1.37 | ||
| Cap/Depr | 5.72% | ||
| Cap/Sales | 0.69% | ||
| Interest Coverage | 7.17 | ||
| Cash Conversion | 81.85% | ||
| Profit Quality | 298.79% | ||
| Current Ratio | 0.94 | ||
| Quick Ratio | 0.93 | ||
| Altman-Z | 5.44 |
F-Score8
WACC9.25%
ROIC/WACC0.95
Cap/Depr(3y)4.86%
Cap/Depr(5y)4.81%
Cap/Sales(3y)0.59%
Cap/Sales(5y)0.6%
Profit Quality(3y)281.44%
Profit Quality(5y)304.12%
High Growth Momentum
Growth
EPS 1Y (TTM)46.44%
EPS 3Y24.73%
EPS 5Y24.67%
EPS Q2Q%3.19%
EPS Next Y10.67%
EPS Next 2Y15.17%
EPS Next 3YN/A
EPS Next 5YN/A
Revenue 1Y (TTM)17.26%
Revenue growth 3Y25.39%
Revenue growth 5Y23.6%
Sales Q2Q%12.74%
Revenue Next Year19.19%
Revenue Next 2Y18.36%
Revenue Next 3Y19.45%
Revenue Next 5Y19.45%
EBIT growth 1Y20.49%
EBIT growth 3Y19.59%
EBIT growth 5Y23.43%
EBIT Next Year140.74%
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y59.17%
FCF growth 3Y18.78%
FCF growth 5Y23.82%
OCF growth 1Y59.41%
OCF growth 3Y19.11%
OCF growth 5Y23.46%