TSX:CSU

Stock Analysis Report

Constellation Software

Executive Summary

Constellation Software Inc., together with its subsidiaries, engages in the development, installation, and customization of software to various markets in the United States, Canada, the United Kingdom, Europe, and internationally.


Snowflake Analysis

Acceptable track record with moderate growth potential.


Similar Companies

Share Price & News

How has Constellation Software's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: CSU has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

5.9%

CSU

5.8%

CA Software

3.7%

CA Market


1 Year Return

10.3%

CSU

-3.1%

CA Software

-23.7%

CA Market

Return vs Industry: CSU exceeded the Canadian Software industry which returned -3.1% over the past year.

Return vs Market: CSU exceeded the Canadian Market which returned -23.7% over the past year.


Shareholder returns

CSUIndustryMarket
7 Day5.9%5.8%3.7%
30 Day-6.9%-12.2%-19.7%
90 Day0.5%-9.2%-24.3%
1 Year10.8%10.3%-2.8%-3.1%-21.2%-23.7%
3 Year104.4%96.3%48.4%45.0%-13.3%-21.4%
5 Year173.5%157.7%88.9%82.3%-0.8%-15.5%

Price Volatility Vs. Market

How volatile is Constellation Software's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Constellation Software undervalued compared to its fair value and its price relative to the market?

23.3%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: CSU (CA$1279.02) is trading below our estimate of fair value (CA$1667.07)

Significantly Below Fair Value: CSU is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: CSU is poor value based on its PE Ratio (57.4x) compared to the Software industry average (15.2x).

PE vs Market: CSU is poor value based on its PE Ratio (57.4x) compared to the Canadian market (10.4x).


Price to Earnings Growth Ratio

PEG Ratio: CSU is poor value based on its PEG Ratio (7.5x)


Price to Book Ratio

PB vs Industry: CSU is overvalued based on its PB Ratio (27.8x) compared to the CA Software industry average (2.9x).


Next Steps

Future Growth

How is Constellation Software forecast to perform in the next 1 to 3 years based on estimates from 8 analysts?

7.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CSU's forecast earnings growth (7.7% per year) is above the savings rate (1.4%).

Earnings vs Market: CSU's earnings (7.7% per year) are forecast to grow faster than the Canadian market (7.1% per year).

High Growth Earnings: CSU's earnings are forecast to grow, but not significantly.

Revenue vs Market: CSU's revenue (15.7% per year) is forecast to grow faster than the Canadian market (3.7% per year).

High Growth Revenue: CSU's revenue (15.7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if CSU's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Constellation Software performed over the past 5 years?

23.6%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: CSU has high quality earnings.

Growing Profit Margin: CSU's current net profit margins (9.5%) are lower than last year (12.4%).


Past Earnings Growth Analysis

Earnings Trend: CSU's earnings have grown significantly by 23.6% per year over the past 5 years.

Accelerating Growth: CSU's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: CSU had negative earnings growth (-12.1%) over the past year, making it difficult to compare to the Software industry average (18.3%).


Return on Equity

High ROE: CSU's Return on Equity (48.5%) is considered outstanding.


Next Steps

Financial Health

How is Constellation Software's financial position?


Financial Position Analysis

Short Term Liabilities: CSU's short term assets ($1.1B) do not cover its short term liabilities ($1.7B).

Long Term Liabilities: CSU's short term assets ($1.1B) do not cover its long term liabilities ($1.1B).


Debt to Equity History and Analysis

Debt Level: CSU's debt to equity ratio (72.1%) is considered high.

Reducing Debt: CSU's debt to equity ratio has reduced from 113.3% to 72.1% over the past 5 years.

Debt Coverage: CSU's debt is well covered by operating cash flow (154.9%).

Interest Coverage: CSU's interest payments on its debt are well covered by EBIT (14.4x coverage).


Balance Sheet

Inventory Level: CSU has a low level of unsold assets or inventory.

Debt Coverage by Assets: CSU's debt is covered by short term assets (assets are 2.1x debt).


Next Steps

Dividend

What is Constellation Software's current dividend yield, its reliability and sustainability?

0.44%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: CSU's dividend (0.44%) isn’t notable compared to the bottom 25% of dividend payers in the Canadian market (2.69%).

High Dividend: CSU's dividend (0.44%) is low compared to the top 25% of dividend payers in the Canadian market (8.66%).


Stability and Growth of Payments

Stable Dividend: CSU is not paying a notable dividend for the Canadian market, therefore no need to check if payments are stable.

Growing Dividend: CSU is not paying a notable dividend for the Canadian market, therefore no need to check if payments are increasing.


Current Payout to Shareholders

Dividend Coverage: CSU is not paying a notable dividend for the Canadian market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of CSU's dividend in 3 years as they are not forecast to pay a notable one for the Canadian market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

7.0yrs

Average management tenure


CEO

Mark Leonard (63yo)

no data

Tenure

US$1

Compensation

Mr. Mark Henri Leonard founded Constellation Software Inc. in 1995 and serves as its President. Mr. Leonard worked in the venture capital business for eleven years. He served in the United States and Canad ...


CEO Compensation Analysis

Compensation vs Market: Mark's total compensation ($USD0.00) is below average for companies of similar size in the Canadian market ($USD6.66M).

Compensation vs Earnings: Mark's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Jamal Baksh
Chief Financial Officer7yrsUS$756.98k0.013% $3.4m
Dexter Salna
President of Perseus Operating Group & Director0.50yrUS$1.72m1.17% $316.4m
Jeff Bender
Director & CEO of Harris Operating Group7yrsUS$1.81m0.37% $99.0m
John Billowits
Chief Executive Officer of Vela Operating Group7yrsUS$2.61m0.18% $48.8m
Mark Leonard
Founderno dataUS$1.002.04% $553.6m
Mark Miller
COO & Director7yrsUS$1.85m1.32% $357.1m
Bernard Anzarouth
Chief Investment Officerno datano data0.70% $189.2m
Mark Dennison
General Counsel & Secretaryno datano data0.014% $3.7m
Barry Symons
Chief Executive Officer of Jonas Operating Group12.58yrsUS$1.10m0.74% $199.3m
Robin van Poelje
Director & CEO of Total Specific Solutions2.08yrsno data0.014% $3.9m

7.0yrs

Average Tenure

Experienced Management: CSU's management team is seasoned and experienced (7 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Dexter Salna
President of Perseus Operating Group & Director0.50yrUS$1.72m1.17% $316.4m
Jeff Bender
Director & CEO of Harris Operating Group7yrsUS$1.81m0.37% $99.0m
Mark Leonard
Founderno dataUS$1.002.04% $553.6m
Mark Miller
COO & Director7yrsUS$1.85m1.32% $357.1m
Robin van Poelje
Director & CEO of Total Specific Solutions2.08yrsno data0.014% $3.9m
Paul McFeeters
Independent Director5.42yrsUS$80.00k0.0021% $577.3k
Robert Kittel
Independent Director6.67yrsUS$100.00k0.0044% $1.2m
Stephen Scotchmer
Lead Independent Directorno dataUS$80.00k0.34% $92.1m
Meredith Hayes
Independent Director7.17yrsUS$80.00k0.013% $3.5m
Lawrence Cunningham
Independent Vice Chairman of the Board1yrUS$60.00k0.0044% $1.2m

6.0yrs

Average Tenure

59.5yo

Average Age

Experienced Board: CSU's board of directors are considered experienced (6 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: CSU insiders have sold more shares than they have bought in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Constellation Software Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Constellation Software Inc.
  • Ticker: CSU
  • Exchange: TSX
  • Founded: 1995
  • Industry: Application Software
  • Sector: Software
  • Market Cap: CA$27.104b
  • Shares outstanding: 21.19m
  • Website: https://www.csisoftware.com

Number of Employees


Location

  • Constellation Software Inc.
  • 20 Adelaide Street East
  • Suite 1200
  • Toronto
  • Ontario
  • M5C 2T6
  • Canada

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
CSUTSX (The Toronto Stock Exchange)YesCommon SharesCACADMay 2006
CNSW.FOTCPK (Pink Sheets LLC)YesCommon SharesUSUSDMay 2006
W9CDB (Deutsche Boerse AG)YesCommon SharesDEEURMay 2006

Biography

Constellation Software Inc., together with its subsidiaries, engages in the development, installation, and customization of software to various markets in the United States, Canada, the United Kingdom, Europe, and internationally. It operates through two segments, Public Sector and Private Sector. The Public Sector segment develops and distributes software solutions primarily to government and government-related customers. The Private Sector segment develops and distributes software solutions, principally to commercial customers. The company also provides related professional and support services. Constellation Software Inc. was founded in 1995 and is headquartered in Toronto, Canada. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/04/01 00:57
End of Day Share Price2020/03/31 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.