CONSTELLATION SOFTWARE INC (CSU.CA) Stock Fundamental Analysis
Canada - Toronto Stock Exchange - TSX:CSU - CA21037X1006 - Common Stock
2640.06 CAD
-11.24 (-0.42%)
We assign a fundamental rating of 6 out of 10 to CSU. CSU was compared to 68 industry peers in the Software industry. CSU has an excellent profitability rating, but 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! These ratings could make CSU a good candidate for growth investing.
1. Profitability
1.1 Basic Checks
- CSU had positive earnings in the past year.
- CSU had a positive operating cash flow in the past year.
- CSU had positive earnings in each of the past 5 years.
- CSU had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- CSU has a better Return On Assets (4.35%) than 73.53% of its industry peers.
- CSU has a Return On Equity of 19.20%. This is amongst the best in the industry. CSU outperforms 86.76% of its industry peers.
- The Return On Invested Capital of CSU (9.25%) is better than 76.47% of its industry peers.
- Measured over the past 3 years, the Average Return On Invested Capital for CSU is below the industry average of 12.48%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 4.35% | ||
| ROE | 19.2% | ||
| ROIC | 9.25% |
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 5.97%, CSU is doing good in the industry, outperforming 72.06% of the companies in the same industry.
- In the last couple of years the Profit Margin of CSU has declined.
- CSU has a better Operating Margin (16.15%) than 82.35% of its industry peers.
- CSU's Operating Margin has been stable in the last couple of years.
- CSU has a better Gross Margin (98.30%) than 98.53% of its industry peers.
- CSU's Gross Margin has been stable in the last couple of years.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 16.15% | ||
| PM (TTM) | 5.97% | ||
| GM | 98.3% |
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
- With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), CSU is creating some value.
- The number of shares outstanding for CSU remains at a similar level compared to 1 year ago.
- CSU has about the same amout of shares outstanding than it did 5 years ago.
- Compared to 1 year ago, CSU has a worse debt to assets ratio.
2.2 Solvency
- An Altman-Z score of 3.51 indicates that CSU is not in any danger for bankruptcy at the moment.
- CSU has a Altman-Z score of 3.51. This is in the better half of the industry: CSU outperforms 64.71% 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 Debt to FCF ratio of 2.13. This is in the better half of the industry: CSU outperforms 75.00% of its industry peers.
- A Debt/Equity ratio of 1.20 is on the high side and indicates that CSU has dependencies on debt financing.
- CSU has a Debt to Equity ratio of 1.20. This is in the lower half of the industry: CSU underperforms 66.18% of its industry peers.
- Even though the debt/equity ratio score it not favorable for CSU, it has very limited outstanding debt, so we won't put too much weight on the DE evaluation.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.2 | ||
| Debt/FCF | 2.13 | ||
| Altman-Z | 3.51 |
ROIC/WACC0.93
WACC9.93%
2.3 Liquidity
- CSU has a Current Ratio of 1.02. This is a normal value and indicates that CSU is financially healthy and should not expect problems in meeting its short term obligations.
- The Current ratio of CSU (1.02) is comparable to the rest of the industry.
- CSU has a Quick Ratio of 1.00. This is a normal value and indicates that CSU is financially healthy and should not expect problems in meeting its short term obligations.
- CSU has a Quick ratio (1.00) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.02 | ||
| Quick Ratio | 1 |
3. Growth
3.1 Past
- The Earnings Per Share has grown by an impressive 35.60% over the past year.
- 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.
- CSU shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 15.10%.
- Measured over the past years, CSU shows a very strong growth in Revenue. The Revenue has been growing by 23.60% on average per year.
EPS 1Y (TTM)35.6%
EPS 3Y24.73%
EPS 5Y24.67%
EPS Q2Q%24.27%
Revenue 1Y (TTM)15.1%
Revenue growth 3Y25.39%
Revenue growth 5Y23.6%
Sales Q2Q%15.98%
3.2 Future
- The Earnings Per Share is expected to grow by 19.01% on average over the next years. This is quite good.
- CSU is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 14.09% yearly.
EPS Next Y19.54%
EPS Next 2Y18.01%
EPS Next 3Y19.01%
EPS Next 5YN/A
Revenue Next Year15.23%
Revenue Next 2Y16.05%
Revenue Next 3Y16.26%
Revenue Next 5Y14.09%
3.3 Evolution
- Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
- Although the future Revenue growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
4. Valuation
4.1 Price/Earnings Ratio
- The Price/Earnings ratio is 19.84, which indicates a rather expensive current valuation of CSU.
- CSU's Price/Earnings ratio is rather cheap when compared to the industry. CSU is cheaper than 80.88% of the companies in the same industry.
- CSU's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 28.60.
- CSU is valuated correctly with a Price/Forward Earnings ratio of 16.26.
- Based on the Price/Forward Earnings ratio, CSU is valued a bit cheaper than 75.00% of the companies in the same industry.
- Compared to an average S&P500 Price/Forward Earnings ratio of 25.83, CSU is valued a bit cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.84 | ||
| Fwd PE | 16.26 |
4.2 Price Multiples
- Based on the Enterprise Value to EBITDA ratio, CSU is valued a bit cheaper than the industry average as 70.59% of the companies are valued more expensively.
- Based on the Price/Free Cash Flow ratio, CSU is valued a bit cheaper than the industry average as 79.41% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 16.16 | ||
| EV/EBITDA | 13.99 |
4.3 Compensation for Growth
- The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
- 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 19.01% in the coming years.
PEG (NY)1.02
PEG (5Y)0.8
EPS Next 2Y18.01%
EPS Next 3Y19.01%
5. Dividend
5.1 Amount
- With a yearly dividend of 0.21%, CSU is not a good candidate for dividend investing.
- In the last 3 months the price of CSU has falen by -28.47%. A price decline artificially increases the dividend yield. It may be a sign investors do not expect the dividend to last.
- Compared to an average industry Dividend Yield of 0.23, CSU pays a better dividend. On top of this CSU pays more dividend than 89.71% of the companies listed in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.82, CSU's dividend is way lower than the S&P500 average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.21% |
5.2 History
- The dividend of CSU decreases each year by -30.09%.
- CSU has been paying a dividend for at least 10 years, so it has a reliable track record.
- CSU has not decreased their dividend for at least 10 years, which is a reliable track record.
Dividend Growth(5Y)-30.09%
Div Incr Years0
Div Non Decr Years17
5.3 Sustainability
- 12.76% of the earnings are spent on dividend by CSU. This is a low number and sustainable payout ratio.
DP12.76%
EPS Next 2Y18.01%
EPS Next 3Y19.01%
CONSTELLATION SOFTWARE INC / CSU.CA FAQ
What is the fundamental rating for CSU stock?
ChartMill assigns a fundamental rating of 6 / 10 to CSU.CA.
What is the valuation status of CONSTELLATION SOFTWARE INC (CSU.CA) stock?
ChartMill assigns a valuation rating of 6 / 10 to CONSTELLATION SOFTWARE INC (CSU.CA). This can be considered as Fairly Valued.
How profitable is CONSTELLATION SOFTWARE INC (CSU.CA) stock?
CONSTELLATION SOFTWARE INC (CSU.CA) has a profitability rating of 7 / 10.
How financially healthy is CONSTELLATION SOFTWARE INC?
The financial health rating of CONSTELLATION SOFTWARE INC (CSU.CA) is 5 / 10.
What is the expected EPS growth for CONSTELLATION SOFTWARE INC (CSU.CA) stock?
The Earnings per Share (EPS) of CONSTELLATION SOFTWARE INC (CSU.CA) is expected to grow by 19.54% in the next year.