CONSTELLATION SOFTWARE INC (CSU.CA) Stock Fundamental Analysis
TSX:CSU - Toronto Stock Exchange - CA21037X1006 - Common Stock - Currency: CAD
Taking everything into account, CSU scores 6 out of 10 in our fundamental rating. CSU was compared to 61 industry peers in the Software industry. While CSU belongs to the best of the industry regarding profitability, there are some minor concerns on its financial health. CSU is valued quite expensively, but it does show have an excellent growth rating.
1. Profitability
1.1 Basic Checks
In the past year CSU was profitable.
CSU had a positive operating cash flow in the past year.
Each year in the past 5 years CSU has been profitable.
Each year in the past 5 years CSU had a positive operating cash flow.
1.2 Ratios
CSU's Return On Assets of 5.33% is fine compared to the rest of the industry. CSU outperforms 75.41% of its industry peers.
CSU has a better Return On Equity (24.33%) than 86.89% of its industry peers.
The Return On Invested Capital of CSU (8.78%) is better than 80.33% of its industry peers.
CSU had an Average Return On Invested Capital over the past 3 years of 10.12%. This is below the industry average of 12.40%.
| 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.
CSU's Profit Margin has declined in the last couple of years.
CSU has a Operating Margin of 14.81%. This is amongst the best in the industry. CSU outperforms 80.33% of its industry peers.
CSU's Operating Margin has been stable in the last couple of years.
CSU has a Gross Margin of 98.31%. This is amongst the best in the industry. CSU outperforms 98.36% of its industry peers.
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
With a Return on Invested Capital (ROIC) just above the Cost of Capital (WACC), CSU is creating some value.
CSU has about the same amout of shares outstanding than it did 1 year ago.
The number of shares outstanding for CSU remains at a similar level compared to 5 years ago.
Compared to 1 year ago, CSU has a worse debt to assets ratio.
2.2 Solvency
An Altman-Z score of 5.56 indicates that CSU is not in any danger for bankruptcy at the moment.
CSU has a better Altman-Z score (5.56) than 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 Debt to FCF ratio of 2.13. This is in the better half of the industry: CSU outperforms 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.
Looking at the Debt to Equity ratio, with a value of 1.25, CSU is doing worse than 68.85% of the companies in the same industry.
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 | 5.56 |
ROIC/WACC1.16
WACC7.54%
2.3 Liquidity
A Current Ratio of 0.94 indicates that CSU may have some problems paying its short term obligations.
CSU has a worse Current ratio (0.94) than 60.66% of its industry peers.
A Quick Ratio of 0.93 indicates that CSU may have some problems paying its short term obligations.
The Quick ratio of CSU (0.93) is worse than 60.66% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.94 | ||
| Quick Ratio | 0.93 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 46.44% over the past year.
The Earnings Per Share has been growing by 24.67% on average over the past years. This is a very strong growth
The Revenue has grown by 17.26% in the past year. This is quite good.
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)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.
The Revenue is expected to grow by 16.85% on average over the next years. This is quite good.
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 5Y16.85%
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 estimated forward Revenue growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 41.96, CSU can be considered very expensive at the moment.
Compared to the rest of the industry, the Price/Earnings ratio of CSU indicates a somewhat cheap valuation: CSU is cheaper than 72.13% of the companies listed in the same industry.
CSU's Price/Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 26.34.
The Price/Forward Earnings ratio is 31.82, which means the current valuation is very expensive for CSU.
Based on the Price/Forward Earnings ratio, CSU is valued a bit cheaper than 77.05% of the companies in the same industry.
CSU is valuated rather expensively when we compare the Price/Forward Earnings ratio to 22.19, which is the current average of the S&P500 Index.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 41.96 | ||
| Fwd PE | 31.82 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of CSU is on the same level as its industry peers.
67.21% 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 | 34.72 | ||
| EV/EBITDA | 27.83 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
The decent profitability rating of CSU 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)3.93
PEG (5Y)1.7
EPS Next 2Y15.17%
EPS Next 3YN/A
5. Dividend
5.1 Amount
CSU has a yearly dividend return of 0.12%, which is pretty low.
Compared to an average industry Dividend Yield of 1.72, CSU pays a better dividend. On top of this CSU pays more dividend than 90.16% of the companies listed in the same industry.
With a Dividend Yield of 0.12, CSU pays less dividend than the S&P500 average, which is at 2.40.
| 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 their dividend for at least 10 years, which is a reliable track record.
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 (6/18/2025, 7:00:00 PM)
4919.99
+87.05 (+1.8%)
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 Cap104.25B
Analysts78.67
Price Target5678.34 (15.41%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.12% |
Yearly Dividend5.47
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)7.22%
PT rev (3m)10.57%
EPS NQ rev (1m)4.31%
EPS NQ rev (3m)4.36%
EPS NY rev (1m)0%
EPS NY rev (3m)-1.98%
Revenue NQ rev (1m)-1.26%
Revenue NQ rev (3m)-1.33%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-0.38%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 41.96 | ||
| Fwd PE | 31.82 | ||
| P/S | 7.42 | ||
| P/FCF | 34.72 | ||
| P/OCF | 33.63 | ||
| P/B | 25.24 | ||
| P/tB | N/A | ||
| EV/EBITDA | 27.83 |
EPS(TTM)117.25
EY2.38%
EPS(NY)154.61
Fwd EY3.14%
FCF(TTM)141.7
FCFY2.88%
OCF(TTM)146.3
OCFY2.97%
SpS663.49
BVpS194.94
TBVpS-283.58
PEG (NY)3.93
PEG (5Y)1.7
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 | 5.56 |
F-Score8
WACC7.54%
ROIC/WACC1.16
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 5Y16.85%
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%