Constellation Software Inc. Just Missed Earnings - But Analysts Have Updated Their Models

The analysts might have been a bit too bullish on Constellation Software Inc. (TSE:CSU), given that the company fell short of expectations when it released its quarterly results last week. Results showed a clear earnings miss, with US$2.7b revenue coming in 3.8% lower than what the analystsexpected. Statutory earnings per share (EPS) of US$5.44 missed the mark badly, arriving some 42% below what was expected. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

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Following the latest results, Constellation Software's nine analysts are now forecasting revenues of US$11.8b in 2025. This would be a solid 14% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to shoot up 26% to US$44.01. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$12.0b and earnings per share (EPS) of US$45.22 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

View our latest analysis for Constellation Software

It might be a surprise to learn that the consensus price target was broadly unchanged at CA$5,319, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Constellation Software analyst has a price target of CA$5,797 per share, while the most pessimistic values it at CA$3,532. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that forecasts expect a continuation of Constellation Software'shistorical trends, as the 19% annualised revenue growth to the end of 2025 is roughly in line with the 22% annual growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the industry are forecast to see their revenues grow 15% per year. It's clear that while Constellation Software's revenue growth is expected to continue on its current trajectory, it's only expected to grow in line with the industry itself.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Constellation Software going out to 2027, and you can see them free on our platform here..

Before you take the next step you should know about the 2 warning signs for Constellation Software that we have uncovered.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.