CONSTELLATION SOFTWARE INC (CSU.CA) Stock Fundamental Analysis
Canada - Toronto Stock Exchange - TSX:CSU - CA21037X1006 - Common Stock
2651.3 CAD
-158.67 (-5.65%)
Taking everything into account, CSU scores 6 out of 10 in our fundamental rating. 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 not overvalued while it is showing excellent growth. This is an interesting combination. This makes CSU very considerable for growth investing!
1. Profitability
1.1 Basic Checks
- In the past year CSU was profitable.
- CSU had a positive operating cash flow in the past year.
- CSU had positive earnings in each of the past 5 years.
- In the past 5 years CSU always reported a positive cash flow from operatings.
1.2 Ratios
- With a decent Return On Assets value of 4.35%, CSU is doing good in the industry, outperforming 73.53% of the companies in the same industry.
- CSU's Return On Equity of 19.20% is amongst the best of the industry. CSU outperforms 86.76% of its industry peers.
- With a decent Return On Invested Capital value of 9.25%, CSU is doing good in the industry, outperforming 76.47% of the companies in the same industry.
- CSU had an Average Return On Invested Capital over the past 3 years of 10.12%. This 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.
- In the last couple of years the Operating Margin of CSU has remained more or less at the same level.
- CSU's Gross Margin of 98.30% is amongst the best of the industry. CSU outperforms 98.53% of its industry peers.
- In the last couple of years the Gross Margin of CSU has remained more or less at the same level.
| 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
- The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so CSU is still creating some value.
- Compared to 1 year ago, CSU has about the same amount of shares outstanding.
- CSU has about the same amout of shares outstanding than it did 5 years ago.
- CSU has a worse debt/assets ratio than last year.
2.2 Solvency
- An Altman-Z score of 3.50 indicates that CSU is not in any danger for bankruptcy at the moment.
- The Altman-Z score of CSU (3.50) is better than 63.24% of its industry peers.
- CSU has a debt to FCF ratio of 2.13. This is a good value and a sign of high solvency as CSU would need 2.13 years to pay back of 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.
- CSU has a Debt/Equity ratio of 1.20. This is a high value indicating a heavy dependency on external 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 | 3.5 |
ROIC/WACC0.93
WACC9.93%
2.3 Liquidity
- A Current Ratio of 1.02 indicates that CSU should not have too much problems paying its short term obligations.
- The Current ratio of CSU (1.02) is comparable to the rest of the industry.
- A Quick Ratio of 1.00 indicates that CSU should not have too much problems paying its short term obligations.
- CSU has a Quick ratio (1.00) which is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.02 | ||
| Quick Ratio | 1 |
3. Growth
3.1 Past
- CSU shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 35.60%, 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.
- Looking at the last year, CSU shows a quite strong growth in Revenue. The Revenue has grown by 15.10% in the last year.
- CSU shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 23.60% yearly.
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.
- Based on estimates for the next years, CSU will show a quite strong growth in Revenue. The Revenue will grow by 14.09% on average per year.
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
- With a Price/Earnings ratio of 19.76, CSU is valued on the expensive side.
- 80.88% of the companies in the same industry are more expensive than CSU, based on the Price/Earnings ratio.
- CSU's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 28.82.
- A Price/Forward Earnings ratio of 16.19 indicates a correct valuation of CSU.
- Based on the Price/Forward Earnings ratio, CSU is valued a bit cheaper than 76.47% of the companies in the same industry.
- When comparing the Price/Forward Earnings ratio of CSU to the average of the S&P500 Index (25.95), we can say CSU is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 19.76 | ||
| Fwd PE | 16.19 |
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.
- Compared to the rest of the industry, the Price/Free Cash Flow ratio of CSU indicates a rather cheap valuation: CSU is cheaper than 80.88% of the companies listed in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 16.1 | ||
| EV/EBITDA | 13.94 |
4.3 Compensation for Growth
- CSU's 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)1.01
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 -28.17%. A price decline artificially increases the dividend yield. It may be a sign investors do not expect the dividend to last.
- CSU's Dividend Yield is rather good when compared to the industry average which is at 0.23. CSU pays more dividend than 89.71% of the companies in the same industry.
- With a Dividend Yield of 0.21, CSU 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 decreases each year by -30.09%.
- 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)-30.09%
Div Incr Years0
Div Non Decr Years17
5.3 Sustainability
- CSU 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 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 5 / 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.