Computer Modelling (CMG) AI Stock Analysis

• Market Cap: C$331.82M
• Dividend Yield: 2.32%
• Average Volume (3M): 246.83K
• Price to Earnings (P/E): 18.2
• Beta (1Y): 0.75
• Revenue Growth: 3.19%
• EPS Growth: -1.07%
• Country: CA
• Employees: 320
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 0.07
• Shares Outstanding: 80,149,000
• 10 Day Avg. Volume: 239,715
• 30 Day Avg. Volume: 246,827
• PEG Ratio: 1.12
• Price to Book (P/B): 12.11
• Price to Sales (P/S): 7.56
• P/FCF Ratio: 23.18
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$5.75
• Price Target Upside: 40.24% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): 0.21
• Revenue Forecast (FY): C$127.35M

• Rating: 61 Neutral
• Price Target: C$4.00 ▼(-2.44% Downside)
• Action: Reiterated Date: 02/18/26
• Date: Action: Reiterated 02/18/26

The score is driven primarily by solid underlying financial quality (high margins and improving leverage) but is held back by a meaningful deterioration in recent fundamentals (slightly negative TTM revenue and sharply lower free cash flow) and a strongly bearish technical setup with the stock trading well below key moving averages and weak momentum indicators. Valuation is moderately supportive with a reasonable P/E and ~3% dividend yield.

Positive Factors

High margins and profitability

Sustained high gross (~79%) and healthy net (~16%) margins reflect strong software economics and pricing power in CMG's niche. High margins support durable cash generation, ongoing R&D and services investment, and provide a buffer against upstream energy cyclicality over the next several quarters.

Improving leverage and balance sheet

A lower debt-to-equity (~0.42) and growing equity reduce financial fragility and raise operational flexibility. Improved leverage strengthens the firm's ability to fund product development, sustain dividends or weather volatility in energy spending, supporting stability over a 2–6 month horizon.

Sticky software + services business model

Core licensing combined with maintenance and professional services creates recurring revenue, high switching costs and deep customer relationships in upstream energy. This enterprise, workflow-embedded model supports revenue resilience and predictable service demand across business cycles.

Negative Factors

Declining revenue trend

A TTM revenue decline (-2.4%) interrupts prior multi-year expansion and signals softer end-market project activity or renewals. Continued top-line weakness would limit reinvestment capacity, reduce operating leverage benefits, and pressure growth prospects over the coming quarters.

Sharply lower free cash flow

A 32.9% drop in free cash flow and modest operating cash flow (~16% of sales) reduce internal funding for R&D, services capacity and shareholder returns. Weaker cash conversion increases reliance on the balance sheet and elevates funding risk if the revenue slowdown persists.

Margin compression and normalized returns

Declining ROE and a notable drop in net margins versus prior periods point to profitability normalization. Reduced excess returns limit the firm's ability to self-fund growth initiatives and may reflect pricing or cost pressures tied to industry dynamics over the medium term.

Computer Modelling Business Overview & Revenue Model

Company Description

Computer Modelling Group Ltd., a computer software technology company, develops and licenses reservoir simulation software in Canada and internationally. The company offers CMOST-AI, an intelligent optimization and analysis tool that offers solution for reservoir by combining statistical analysis, machine learning, and non-biased data interpretation; IMEX, a black oil simulator that is used to model primary and secondary oil recovery processes in conventional and unconventional oil and gas reservoirs; GEM, an equation-of-state reservoir simulator for compositional, chemical, and unconventional reservoir modelling; STARS, a thermal and processes reservoir simulator for the modelling of steam, solvents, air, and chemical recovery processes; and CoFlow, a reservoir and production system modelling software that allows reservoir and production engineers to make informed decisions on large integrated oil and gas projects in Canada. It also provides Builder, a pre-processor that simplifies the creation of simulation models by providing a framework for data integration and workflow management between various data sources; Results, a post-processor that helps in enhancing understanding and insight into recovery processes and reservoir performance; WinProp, a fluid property characterization tool; and Autotune artificial intelligence solutions that tune the model for optimal run time. In addition, it offers professional services comprising specialized support, consulting, training, and contract research services. The company was founded in 1978 and is headquartered in Calgary, Canada.

How the Company Makes Money

CMG generates revenue primarily through the sale of software licenses and related services. The company offers different licensing models, including perpetual licenses and subscription-based services, which allow clients to access its advanced simulation software. Additionally, CMG earns income through professional services, such as training, consulting, and technical support, which help clients effectively implement and utilize their software solutions. Significant partnerships with major oil and gas companies enhance CMG's market presence and contribute to its revenue streams by fostering long-term relationships and enabling collaborative projects. Furthermore, the company invests in research and development to continuously innovate its offerings, ensuring it meets the evolving needs of the industry and maintains a competitive edge.

Computer Modelling Financial Statement Overview

Summary

High-margin software profile with solid profitability (TTM gross margin ~79%, net margin ~16%) and moderate, improving leverage (debt-to-equity ~0.42). Offsetting this, fundamentals have softened: TTM revenue declined (-2.4%), margins are down versus prior years, and free cash flow dropped sharply (-32.9%), indicating weakening near-term momentum and cash conversion.

Income Statement

Profitability remains strong for a software business, with TTM (Trailing-Twelve-Months) gross margin ~79% and net margin ~16% (still healthy, but down from ~24–30% in prior annual periods). Revenue growth is a key soft spot: TTM (Trailing-Twelve-Months) revenue declined (-2.4%) after solid multi-year expansion through FY2025. Overall, margins are attractive but the recent slowdown and margin compression reduce the score.

Balance Sheet

Leverage appears manageable and improving, with debt-to-equity ~0.42 in TTM (Trailing-Twelve-Months) versus higher levels historically (~0.72–0.94). Equity has grown over time and returns on equity remain strong (~24% TTM (Trailing-Twelve-Months), previously ~38–46%), though the downshift suggests profitability is normalizing. Overall balance sheet risk looks moderate, but returns have cooled versus prior years.

Cash Flow

Cash generation is positive, with free cash flow close to net income in TTM (Trailing-Twelve-Months) (~0.91), indicating earnings are largely supported by cash. However, free cash flow fell sharply in TTM (Trailing-Twelve-Months) (-32.9%) and operating cash flow is relatively low versus revenue (about ~16% of TTM (Trailing-Twelve-Months) sales), pointing to weaker near-term cash conversion versus the prior year. The business remains cash-generative, but the recent decline is a notable flag.

Breakdown	TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement
Total Revenue	126.20M	129.45M	73.85M	66.20M	67.36M	75.79M
Gross Profit	99.63M	104.51M	56.69M	49.92M	51.67M	57.66M
EBITDA	35.06M	43.24M	29.51M	30.22M	34.84M	36.11M
Net Income	17.09M	22.44M	19.80M	18.41M	20.19M	23.48M
Balance Sheet
Total Assets	192.40M	204.76M	137.13M	125.15M	122.49M	120.87M
Cash, Cash Equivalents and Short-Term Investments	23.74M	43.88M	66.85M	59.66M	49.07M	40.51M
Total Debt	39.36M	38.58M	37.98M	39.59M	40.96M	42.38M
Total Liabilities	105.06M	118.85M	84.68M	78.43M	79.07M	82.50M
Stockholders Equity	87.33M	85.91M	52.45M	46.72M	43.42M	38.37M
Cash Flow
Free Cash Flow	17.42M	28.50M	23.83M	28.01M	26.03M	19.54M
Operating Cash Flow	20.43M	29.92M	25.88M	28.71M	26.43M	20.53M
Investing Cash Flow	-22.80M	-37.96M	-2.05M	-703.00K	-397.00K	-990.00K
Financing Cash Flow	-16.31M	-13.67M	-16.64M	-17.42M	-17.47M	-33.33M

Computer Modelling Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 4.10
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CMG, the sentiment is Negative. The current price of 4.1 is below the 20-day moving average (MA) of 4.19, below the 50-day MA of 4.76, and below the 200-day MA of 5.93, indicating a bearish trend. The MACD of -0.19 indicates Negative momentum. The RSI at 39.49 is Neutral, neither overbought nor oversold. The STOCH value of 64.73 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:CMG.

Computer Modelling Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TCS	64 Neutral	C$374.05M	74.37	8.14%	1.07%	7.00%	110.62%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
CMG	61 Neutral	C$331.82M	18.15	25.64%	2.32%	3.19%	-1.07%
URL	60 Neutral	C$165.29M	52.17	24.43%	―	20.62%	21.78%
IMP	46 Neutral	C$99.24M	-21.23	-14.10%	―	48.18%	-401.19%
ABXX	45 Neutral	C$61.56M	-27.27	-147.54%	―	-34.80%	-28.42%

Computer Modelling Corporate Events

Computer Modelling Group Hit by Organic Revenue Slide but Pins Hopes on Acquisitions and Recurring Growth

Computer Modelling Group reported a 9% drop in third-quarter revenue to $32.7 million, driven by a 17% organic decline partly offset by 8% growth from acquisitions. Recurring revenue fell 4%, adjusted EBITDA slid 30% with margin compressing to 30%, earnings per share dropped 42% to $0.07, and free cash flow declined 34% to $5.8 million, as weaker high-margin reservoir and production solutions and lower professional services weighed on results.

For the first nine months, total revenue fell 3% to $92.5 million, with acquisitions largely offsetting double‑digit organic erosion, while recurring revenue edged up 4% on the back of acquired businesses. Management says challenging market conditions and elongated sales cycles persist but expects recurring revenue to improve in the fourth quarter and return to positive organic growth in fiscal 2027, even as adjusted EBITDA for the current year is set to remain below last year’s level.

The most recent analyst rating on (TSE:CMG) stock is a Buy with a C$5.00 price target. To see the full list of analyst forecasts on Computer Modelling stock, see the TSE:CMG Stock Forecast page.

Computer Modelling Group Adds Veteran Dealmaker Christopher Wright to Board

Computer Modelling Group Ltd. has appointed Christopher Wright to its board of directors, adding a veteran of global investment, board governance, and growth strategy to its leadership. The Calgary-based energy software specialist aims to leverage his experience to support its role in solving complex subsurface and surface challenges for the new energy sector worldwide.

Wright previously served for 35 years on the board of Roper Technologies, helping guide more than 60 acquisitions and contributing to significant enterprise value growth. His extensive background in mergers and acquisitions, vertical software, and international capital markets is expected to bolster CMG’s strategic vision and execution, potentially accelerating its expansion and value creation efforts for stakeholders.

The most recent analyst rating on (TSE:CMG) stock is a Buy with a C$5.00 price target. To see the full list of analyst forecasts on Computer Modelling stock, see the TSE:CMG Stock Forecast page.