CONSTELLATION SOFTWARE (CSU-DB.CA) Stock Fundamental Analysis
Canada - Toronto Stock Exchange - TSX:CSU-DB - CA21037XAA87
117.82 CAD
-0.43 (-0.36%)
Taking everything into account, CSU-DB scores 6 out of 10 in our fundamental rating. CSU-DB was compared to 68 industry peers in the Software industry. While CSU-DB has a great profitability rating, there are some minor concerns on its financial health. CSU-DB has both an excellent growth and valuation score. This means it is growing and it is still cheap. This is a rare combination!
1. Profitability
1.1 Basic Checks
- CSU-DB had positive earnings in the past year.
- CSU-DB had a positive operating cash flow in the past year.
- In the past 5 years CSU-DB has always been profitable.
- CSU-DB had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- The Return On Assets of CSU-DB (4.35%) is better than 75.00% of its industry peers.
- The Return On Equity of CSU-DB (19.20%) is better than 88.24% of its industry peers.
- The Return On Invested Capital of CSU-DB (9.25%) is better than 77.94% of its industry peers.
- Measured over the past 3 years, the Average Return On Invested Capital for CSU-DB 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
- CSU-DB's Profit Margin of 5.97% is fine compared to the rest of the industry. CSU-DB outperforms 73.53% of its industry peers.
- CSU-DB's Profit Margin has declined in the last couple of years.
- CSU-DB's Operating Margin of 16.15% is amongst the best of the industry. CSU-DB outperforms 83.82% of its industry peers.
- CSU-DB's Operating Margin has been stable in the last couple of years.
- CSU-DB has a better Gross Margin (98.30%) than 100.00% of its industry peers.
- CSU-DB'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
- CSU-DB has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
- The number of shares outstanding for CSU-DB remains at a similar level compared to 1 year ago.
- Compared to 5 years ago, CSU-DB has about the same amount of shares outstanding.
- CSU-DB has a worse debt/assets ratio than last year.
2.2 Solvency
- Based on the Altman-Z score of 1.51, we must say that CSU-DB is in the distress zone and has some risk of bankruptcy.
- CSU-DB has a Altman-Z score of 1.51. This is comparable to the rest of the industry: CSU-DB outperforms 48.53% of its industry peers.
- The Debt to FCF ratio of CSU-DB is 2.13, which is a good value as it means it would take CSU-DB, 2.13 years of fcf income to pay off all of its debts.
- CSU-DB's Debt to FCF ratio of 2.13 is fine compared to the rest of the industry. CSU-DB outperforms 76.47% of its industry peers.
- A Debt/Equity ratio of 1.20 is on the high side and indicates that CSU-DB has dependencies on debt financing.
- The Debt to Equity ratio of CSU-DB (1.20) is worse than 64.71% of its industry peers.
- Although CSU-DB 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 | 1.2 | ||
| Debt/FCF | 2.13 | ||
| Altman-Z | 1.51 |
ROIC/WACC1.3
WACC7.1%
2.3 Liquidity
- A Current Ratio of 1.02 indicates that CSU-DB should not have too much problems paying its short term obligations.
- CSU-DB has a Current ratio (1.02) which is comparable to the rest of the industry.
- CSU-DB has a Quick Ratio of 1.00. This is a normal value and indicates that CSU-DB is financially healthy and should not expect problems in meeting its short term obligations.
- With a Quick ratio value of 1.00, CSU-DB perfoms like the industry average, outperforming 45.59% of the companies in the same industry.
| 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.
- The Earnings Per Share has been growing by 24.67% on average over the past years. This is a very strong growth
- CSU-DB shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 15.10%.
- The Revenue has been growing by 23.60% on average over the past years. This is a very strong growth!
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
- Based on estimates for the next years, CSU-DB will show a quite strong growth in Earnings Per Share. The EPS will grow by 19.01% on average per year.
- CSU-DB 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
- 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 0.89, the valuation of CSU-DB can be described as very cheap.
- 98.53% of the companies in the same industry are more expensive than CSU-DB, based on the Price/Earnings ratio.
- CSU-DB's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 28.39.
- With a Price/Forward Earnings ratio of 0.73, the valuation of CSU-DB can be described as very cheap.
- Based on the Price/Forward Earnings ratio, CSU-DB is valued cheaper than 98.53% of the companies in the same industry.
- The average S&P500 Price/Forward Earnings ratio is at 25.72. CSU-DB is valued rather cheaply when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 0.89 | ||
| Fwd PE | 0.73 |
4.2 Price Multiples
- Based on the Enterprise Value to EBITDA ratio, CSU-DB is valued cheaply inside the industry as 95.59% of the companies are valued more expensively.
- Compared to the rest of the industry, the Price/Free Cash Flow ratio of CSU-DB indicates a rather cheap valuation: CSU-DB is cheaper than 98.53% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 0.72 | ||
| EV/EBITDA | 1.42 |
4.3 Compensation for Growth
- The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
- The decent profitability rating of CSU-DB may justify a higher PE ratio.
- A more expensive valuation may be justified as CSU-DB's earnings are expected to grow with 19.01% in the coming years.
PEG (NY)0.05
PEG (5Y)0.04
EPS Next 2Y18.01%
EPS Next 3Y19.01%
5. Dividend
5.1 Amount
- With a yearly dividend of 0.21%, CSU-DB is not a good candidate for dividend investing.
- CSU-DB's Dividend Yield is rather good when compared to the industry average which is at 0.23. CSU-DB pays more dividend than 88.24% of the companies in the same industry.
- With a Dividend Yield of 0.21, CSU-DB pays less dividend than the S&P500 average, which is at 1.82.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.21% |
5.2 History
- The dividend of CSU-DB decreases each year by -30.09%.
- CSU-DB has been paying a dividend for over 5 years, so it has already some track record.
Dividend Growth(5Y)-30.09%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
- CSU-DB pays out 12.76% of its income as dividend. This is a sustainable payout ratio.
DP12.76%
EPS Next 2Y18.01%
EPS Next 3Y19.01%
CONSTELLATION SOFTWARE / CSU-DB.CA FAQ
What is the ChartMill fundamental rating of CONSTELLATION SOFTWARE (CSU-DB.CA) stock?
ChartMill assigns a fundamental rating of 6 / 10 to CSU-DB.CA.
What is the valuation status for CSU-DB stock?
ChartMill assigns a valuation rating of 9 / 10 to CONSTELLATION SOFTWARE (CSU-DB.CA). This can be considered as Undervalued.
How profitable is CONSTELLATION SOFTWARE (CSU-DB.CA) stock?
CONSTELLATION SOFTWARE (CSU-DB.CA) has a profitability rating of 7 / 10.
Can you provide the financial health for CSU-DB stock?
The financial health rating of CONSTELLATION SOFTWARE (CSU-DB.CA) is 4 / 10.
Can you provide the dividend sustainability for CSU-DB stock?
The dividend rating of CONSTELLATION SOFTWARE (CSU-DB.CA) is 3 / 10 and the dividend payout ratio is 12.76%.