CONSTELLATION SOFTWARE INC (CSU.CA) Stock Fundamental Analysis
TSX:CSU - Toronto Stock Exchange - CA21037X1006 - Common Stock - Currency: CAD
We assign a fundamental rating of 6 out of 10 to CSU. CSU was compared to 66 industry peers in the Software industry. CSU scores excellent on profitability, 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!
1. Profitability
1.1 Basic Checks
CSU had positive earnings in the past year.
In the past year CSU had a positive cash flow from operations.
Each year in the past 5 years CSU has been profitable.
CSU had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
The Return On Assets of CSU (5.06%) is better than 72.73% of its industry peers.
The Return On Equity of CSU (23.93%) is better than 86.36% of its industry peers.
CSU's Return On Invested Capital of 8.69% is fine compared to the rest of the industry. CSU outperforms 78.79% of its industry peers.
The Average Return On Invested Capital over the past 3 years for CSU is in line with the industry average of 11.84%.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.06% | ||
| ROE | 23.93% | ||
| ROIC | 8.69% |
ROA(3y)5.69%
ROA(5y)7.31%
ROE(3y)29.75%
ROE(5y)35.86%
ROIC(3y)11.42%
ROIC(5y)12.52%
1.3 Margins
CSU has a better Profit Margin (6.57%) than 71.21% of its industry peers.
In the last couple of years the Profit Margin of CSU has declined.
CSU's Operating Margin of 14.30% is amongst the best of the industry. CSU outperforms 83.33% of its industry peers.
In the last couple of years the Operating Margin of CSU has declined.
CSU has a better Gross Margin (98.35%) than 96.97% 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 | 14.3% | ||
| PM (TTM) | 6.57% | ||
| GM | 98.35% |
OM growth 3Y-6.34%
OM growth 5Y-2%
PM growth 3Y-15.11%
PM growth 5Y-11.52%
GM growth 3Y0.19%
GM growth 5Y0.26%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), CSU is destroying value.
CSU has about the same amout of shares outstanding than it did 1 year ago.
CSU has about the same amout of shares outstanding than it did 5 years ago.
The debt/assets ratio for CSU is higher compared to a year ago.
2.2 Solvency
An Altman-Z score of 5.77 indicates that CSU is not in any danger for bankruptcy at the moment.
The Altman-Z score of CSU (5.77) is better than 77.27% of its industry peers.
The Debt to FCF ratio of CSU is 2.29, which is a good value as it means it would take CSU, 2.29 years of fcf income to pay off all of its debts.
CSU has a better Debt to FCF ratio (2.29) than 72.73% of its industry peers.
CSU has a Debt/Equity ratio of 1.39. This is a high value indicating a heavy dependency on external financing.
CSU has a Debt to Equity ratio of 1.39. This is in the lower half of the industry: CSU underperforms 66.67% 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 | 1.39 | ||
| Debt/FCF | 2.29 | ||
| Altman-Z | 5.77 |
ROIC/WACC0.7
WACC12.47%
2.3 Liquidity
A Current Ratio of 0.93 indicates that CSU may have some problems paying its short term obligations.
CSU has a Current ratio (0.93) which is in line with its industry peers.
A Quick Ratio of 0.92 indicates that CSU may have some problems paying its short term obligations.
The Quick ratio of CSU (0.92) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.93 | ||
| Quick Ratio | 0.92 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an nice 16.26% over the past year.
CSU shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 17.65% yearly.
The Revenue has grown by 22.11% in the past year. This is a very strong growth!
CSU shows a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 22.40% yearly.
EPS 1Y (TTM)16.26%
EPS 3Y22.5%
EPS 5Y17.65%
EPS Q2Q%31.3%
Revenue 1Y (TTM)22.11%
Revenue growth 3Y28.43%
Revenue growth 5Y22.4%
Sales Q2Q%19.52%
3.2 Future
Based on estimates for the next years, CSU will show a very strong growth in Earnings Per Share. The EPS will grow by 21.69% on average per year.
CSU is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 19.14% yearly.
EPS Next Y19.91%
EPS Next 2Y23.63%
EPS Next 3Y21.69%
EPS Next 5YN/A
Revenue Next Year20.62%
Revenue Next 2Y20.1%
Revenue Next 3Y19.22%
Revenue Next 5Y19.14%
3.3 Evolution
When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is stable.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 47.11 indicates a quite expensive valuation of CSU.
74.24% of the companies in the same industry are more expensive than CSU, based on the Price/Earnings ratio.
When comparing the Price/Earnings ratio of CSU to the average of the S&P500 Index (29.39), we can say CSU is valued expensively.
Based on the Price/Forward Earnings ratio of 35.12, the valuation of CSU can be described as expensive.
Based on the Price/Forward Earnings ratio, CSU is valued cheaply inside the industry as 80.30% of the companies are valued more expensively.
When comparing the Price/Forward Earnings ratio of CSU to the average of the S&P500 Index (94.38), we can say CSU is valued rather cheaply.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 47.11 | ||
| Fwd PE | 35.12 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of CSU indicates a somewhat cheap valuation: CSU is cheaper than 60.61% of the companies listed in the same industry.
66.67% 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 | 36.59 | ||
| EV/EBITDA | 29.02 |
4.3 Compensation for Growth
The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates CSU does not grow enough to justify the current Price/Earnings ratio.
CSU has a very decent profitability rating, which may justify a higher PE ratio.
CSU's earnings are expected to grow with 21.69% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.37
PEG (5Y)2.67
EPS Next 2Y23.63%
EPS Next 3Y21.69%
5. Dividend
5.1 Amount
With a yearly dividend of 0.12%, CSU is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 1.75, CSU pays a better dividend. On top of this CSU pays more dividend than 87.88% 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 2.30.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.12% |
5.2 History
The dividend of CSU has a limited annual growth rate of 0.05%.
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)0.05%
Div Incr Years0
Div Non Decr Years17
5.3 Sustainability
13.36% of the earnings are spent on dividend by CSU. This is a low number and sustainable payout ratio.
CSU's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP13.36%
EPS Next 2Y23.63%
EPS Next 3Y21.69%
CONSTELLATION SOFTWARE INC
TSX:CSU (2/11/2025, 7:00:00 PM)
4882.25
-51.92 (-1.05%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners42.03%
Inst Owner ChangeN/A
Ins Owners4.51%
Ins Owner ChangeN/A
Market Cap103.45B
Analysts77.33
Price Target5064.3 (3.73%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 0.12% |
Yearly Dividend4.01
Dividend Growth(5Y)0.05%
DP13.36%
Div Incr Years0
Div Non Decr Years17
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)2.22%
Min EPS beat(2)-8.67%
Max EPS beat(2)13.12%
EPS beat(4)1
Avg EPS beat(4)-6.41%
Min EPS beat(4)-18.14%
Max EPS beat(4)13.12%
EPS beat(8)4
Avg EPS beat(8)2.67%
EPS beat(12)7
Avg EPS beat(12)4.99%
EPS beat(16)9
Avg EPS beat(16)2.78%
Revenue beat(2)0
Avg Revenue beat(2)-1.85%
Min Revenue beat(2)-2.31%
Max Revenue beat(2)-1.4%
Revenue beat(4)1
Avg Revenue beat(4)-0.73%
Min Revenue beat(4)-2.31%
Max Revenue beat(4)1.53%
Revenue beat(8)3
Avg Revenue beat(8)-0.48%
Revenue beat(12)3
Avg Revenue beat(12)-0.53%
Revenue beat(16)5
Avg Revenue beat(16)-0.19%
PT rev (1m)0%
PT rev (3m)7.93%
EPS NQ rev (1m)1.9%
EPS NQ rev (3m)-1.81%
EPS NY rev (1m)0.4%
EPS NY rev (3m)-3.16%
Revenue NQ rev (1m)0.15%
Revenue NQ rev (3m)-1.22%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-0.7%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 47.11 | ||
| Fwd PE | 35.12 | ||
| P/S | 7.46 | ||
| P/FCF | 36.59 | ||
| P/OCF | 35.59 | ||
| P/B | 27.17 | ||
| P/tB | N/A | ||
| EV/EBITDA | 29.02 |
EPS(TTM)103.63
EY2.12%
EPS(NY)139.03
Fwd EY2.85%
FCF(TTM)133.45
FCFY2.73%
OCF(TTM)137.17
OCFY2.81%
SpS654.79
BVpS179.69
TBVpS-302.92
PEG (NY)2.37
PEG (5Y)2.67
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 5.06% | ||
| ROE | 23.93% | ||
| ROCE | 17.57% | ||
| ROIC | 8.69% | ||
| ROICexc | 11.81% | ||
| ROICexgc | N/A | ||
| OM | 14.3% | ||
| PM (TTM) | 6.57% | ||
| GM | 98.35% | ||
| FCFM | 20.38% |
ROA(3y)5.69%
ROA(5y)7.31%
ROE(3y)29.75%
ROE(5y)35.86%
ROIC(3y)11.42%
ROIC(5y)12.52%
ROICexc(3y)14.97%
ROICexc(5y)16.66%
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)23.1%
ROCE(5y)25.52%
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3Y-12.73%
ROICexc growth 5Y-9.52%
OM growth 3Y-6.34%
OM growth 5Y-2%
PM growth 3Y-15.11%
PM growth 5Y-11.52%
GM growth 3Y0.19%
GM growth 5Y0.26%
F-Score5
Asset Turnover0.77
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.39 | ||
| Debt/FCF | 2.29 | ||
| Debt/EBITDA | 1.44 | ||
| Cap/Depr | 4.63% | ||
| Cap/Sales | 0.57% | ||
| Interest Coverage | 7.25 | ||
| Cash Conversion | 78.89% | ||
| Profit Quality | 310.38% | ||
| Current Ratio | 0.93 | ||
| Quick Ratio | 0.92 | ||
| Altman-Z | 5.77 |
F-Score5
WACC12.47%
ROIC/WACC0.7
Cap/Depr(3y)4.55%
Cap/Depr(5y)5.32%
Cap/Sales(3y)0.56%
Cap/Sales(5y)0.66%
Profit Quality(3y)320.98%
Profit Quality(5y)289.81%
High Growth Momentum
Growth
EPS 1Y (TTM)16.26%
EPS 3Y22.5%
EPS 5Y17.65%
EPS Q2Q%31.3%
EPS Next Y19.91%
EPS Next 2Y23.63%
EPS Next 3Y21.69%
EPS Next 5YN/A
Revenue 1Y (TTM)22.11%
Revenue growth 3Y28.43%
Revenue growth 5Y22.4%
Sales Q2Q%19.52%
Revenue Next Year20.62%
Revenue Next 2Y20.1%
Revenue Next 3Y19.22%
Revenue Next 5Y19.14%
EBIT growth 1Y27.06%
EBIT growth 3Y20.29%
EBIT growth 5Y19.96%
EBIT Next Year102.19%
EBIT Next 3Y42.38%
EBIT Next 5YN/A
FCF growth 1Y64.36%
FCF growth 3Y14.37%
FCF growth 5Y22.23%
OCF growth 1Y63.76%
OCF growth 3Y14.47%
OCF growth 5Y21.86%