Constellation Software (CSU) AI Stock Analysis

• Market Cap: C$107.38B
• Dividend Yield: 0.11%
• Average Volume (3M): 37.29K
• Price to Earnings (P/E): 104.2
• Beta (1Y): 1.08
• Revenue Growth: 20.99%
• EPS Growth: 33.05%
• Country: CA
• Employees: 45,000
• Sector: Technology
• Sector Strength: 77
• Industry: Software - Application
• EPS (TTM): 33.88
• Shares Outstanding: 21,191,530
• 10 Day Avg. Volume: 36,067
• 30 Day Avg. Volume: 37,288
• PEG Ratio: 73.02
• Price to Book (P/B): 25.24
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 34.71
• Enterprise Value/Market Cap: 0.74
• Enterprise Value/Revenue: 2.01
• Enterprise Value/Gross Profit: 8.61
• Enterprise Value/Ebitda: 8.68
• 1Y Price Target: C$5,578.57
• Price Target Upside: 10.10% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 7

Constellation Software shows strong financial health with robust revenue growth and cash management, supported by strategic acquisitions. However, a high P/E ratio and low dividend yield raise concerns about valuation. Technical analysis is somewhat mixed but generally positive. The overall score reflects a solid investment opportunity with some caution regarding high leverage and valuation.

Positive Factors

Financial Performance

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

M&A Strategy

There is greater confidence in Constellation Software's ability to continue scaling its decentralized M&A framework.

Management and Leadership

Constellation Software is considered very well-managed, with strong historical return on invested capital and growth metrics.

Negative Factors

Earnings Performance

EPS was well below consensus.

Organic Revenue

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

Revenue Growth

CSU's 12.8% revenue growth was a notable deceleration from recent quarters.

Constellation Software Business Overview & Revenue Model

Company Description

Constellation Software Inc., together with its subsidiaries, acquires, builds, and manages vertical market software businesses in Canada, the United States, the United Kingdom, and rest of Europe. Its industry specific software businesses provide specialized and mission-critical software solutions. The company serves public and private sector markets. Constellation Software Inc. was incorporated in 1995 and is headquartered in Toronto, Canada.

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 impressive financial health across its income statement, balance sheet, and cash flow statement. The company exhibits strong revenue and profit growth, efficient cost management, and robust cash generation. While the balance sheet is solid, attention to rising debt levels could further strengthen its financial standing. Overall, the company is well-positioned for continued success and growth in the software application industry.

Income Statement

Constellation Software shows remarkable growth and stability in its income statement. The company has demonstrated consistent revenue growth over the years, with a notable TTM revenue of $10.367 billion, marking an increase from $10.066 billion the previous year. Gross profit margin is very strong at approximately 88.7%, reflecting efficient cost management and high profitability. The net profit margin of 7.15% and the EBIT margin of 16.59% indicate robust operational efficiency. These metrics highlight a well-managed company with sustained growth and profitability.

Balance Sheet

The balance sheet of Constellation Software reflects a strong financial position with a reasonable debt-to-equity ratio of 1.55, indicating a balanced approach to leverage. The equity ratio stands at 21.92%, suggesting a solid equity base relative to total assets. While the return on equity (ROE) at 24.33% indicates excellent returns on shareholder investments, the company should monitor its increasing debt levels to ensure continued financial health. Overall, the balance sheet is robust, with a good mix of equity and debt.

Cash Flow

The cash flow statement reveals Constellation Software's strong cash generation capabilities, with a TTM operating cash flow of $2.287 billion and an impressive free cash flow of $2.215 billion. The free cash flow to net income ratio is 2.99, indicating excellent cash conversion from profits. The company's free cash flow growth rate of 4.03% compared to the previous period showcases steady cash flow growth. These metrics reflect a healthy cash position, supporting ongoing operations and potential growth opportunities.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
10.37B	10.07B	8.40B	6.62B	5.11B	3.97B
	Gross Profit
9.19B	8.94B	7.44B	5.86B	4.58B	3.54B
	EBIT
1.72B	1.65B	431.00M	764.00M	436.00M	656.00M
	EBITDA
2.62B	2.48B	1.45B	1.63B	1.07B	1.15B
	Net Income Common Stockholders
741.00M	731.00M	565.00M	512.00M	168.00M	436.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.49B	1.99B	1.30B	926.00M	802.00M	767.00M
	Total Assets
13.90B	12.86B	10.90B	7.88B	5.77B	4.38B
	Total Debt
4.72B	4.53B	3.68B	2.29B	1.39B	725.00M
	Net Debt
2.25B	2.55B	2.40B	1.48B	624.00M	-33.00M
	Total Liabilities
10.26B	9.58B	8.94B	5.95B	4.25B	3.33B
	Stockholders Equity
3.05B	2.79B	1.88B	1.71B	1.06B	1.05B
Cash Flow		Free Cash Flow
2.21B	2.13B	1.74B	1.26B	1.27B	1.16B
	Operating Cash Flow
2.29B	2.20B	1.78B	1.30B	1.30B	1.19B
	Investing Cash Flow
-1.56B	-1.57B	-1.64B	-1.69B	-1.24B	-512.00M
	Financing Cash Flow
-328.00M	114.00M	316.00M	483.00M	-41.00M	-247.00M

Constellation Software Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 5066.89
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

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 5066.89 is above the 20-day moving average (MA) of 4981.62, above the 50-day MA of 4759.60, and above the 200-day MA of 4548.69, indicating a bullish trend. The MACD of 91.59 indicates Positive momentum. The RSI at 57.29 is Neutral, neither overbought nor oversold. The STOCH value of 44.62 is Neutral, 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
CSU	77 Outperform	C$107.38B	104.18	27.41%	0.11%	20.99%	33.05%
KXS	73 Outperform	C$5.56B	402.15	2.32%	―	15.14%	-31.45%
Sector *	60 Neutral	$11.59B	10.34	-7.15%	2.94%	7.49%	-10.88%

Constellation Software Corporate Events

Constellation Software Elects New Board Members at AGM

Constellation Software Inc. announced the election of nine directors at its annual general shareholders’ meeting held on May 13, 2025. The meeting saw the election of all nominees listed in the management proxy circular, with significant support from shareholders. The company also acknowledged the contributions of directors who did not stand for re-election, indicating a transition in its board composition. This election is pivotal for Constellation Software as it continues to strengthen its governance and strategic direction.

The most recent analyst rating on (TSE:CSU) stock is a Hold with a C$4250.00 price target. To see the full list of analyst forecasts on Constellation Software stock, see the TSE:CSU Stock Forecast page.

Spark’s Take on TSE:CSU Stock

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

Constellation Software’s strong financial performance, characterized by robust revenue growth and efficient cash flow management, is a key strength, contributing significantly to the overall score. Technical analysis provides mixed signals, cautioning against potential overbought conditions. Valuation is a concern, with a high P/E ratio suggesting that the stock may be overpriced. Recent corporate events, including strategic acquisitions and positive revenue growth, offer additional support for a favorable outlook, though high leverage remains a risk.

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

Constellation Software Reports Strong Q1 2025 Results and Declares Dividend

Constellation Software Inc. reported a 13% increase in revenue for Q1 2025, reaching $2,654 million, driven primarily by acquisitions. The company declared a $1.00 per share dividend and reported a net income of $115 million, reflecting a positive financial performance. The acquisition of shares in Asseco Poland S.A. and increased cash flows from operations highlight Constellation’s strategic growth and robust financial health.

The most recent analyst rating on (TSE:CSU) stock is a Hold with a C$4250.00 price target. To see the full list of analyst forecasts on Constellation Software stock, see the TSE:CSU Stock Forecast page.

Spark’s Take on TSE:CSU Stock

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

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.

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

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.