Constellation Software (TSE:CSU)
TSX:CSU
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Constellation Software
(TSX:CSU)
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Rating:67Neutral
Price Target:
C$3,173.00
▲(20.81% Upside)
Action:Reiterated
Date:05/15/26
The score is driven primarily by strong cash-flow generation and solid operating profitability, partially constrained by leverage and a recent slowdown in growth. Technical signals are neutral-to-weak (negative MACD and price below longer-term averages), while valuation appears fairly full with a low dividend yield. The latest earnings call supports a moderately positive view longer term (active M&A, stable organic growth) but flags near-term margin headwinds.
Positive Factors
Vertical market software consolidator
Constellation's buy-and-hold VMS model focuses on mission-critical, industry-specific software sold through largely autonomous operating groups. That structure drives high customer retention, recurring maintenance/SaaS revenue and niche defensibility, supporting durable, predictable cash flows over multi-year horizons.
Negative Factors
Elevated leverage
High debt-to-equity reduces financial flexibility and raises refinancing and covenant risks if conditions worsen. Operating cash flow covers a modest portion of debt (~0.31–0.51 historically, ~0.41 TTM), so prolonged stress or integration headwinds could constrain capital deployment or force opportunistic asset sales.
Read all positive and negative factors
Positive Factors
Negative Factors
Vertical market software consolidator
Constellation's buy-and-hold VMS model focuses on mission-critical, industry-specific software sold through largely autonomous operating groups. That structure drives high customer retention, recurring maintenance/SaaS revenue and niche defensibility, supporting durable, predictable cash flows over multi-year horizons.
Read all positive factors
Constellation Software (CSU) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$64.81B
Dividend Yield0.17%
Average Volume (3M)66.01K
Price to Earnings (P/E)59.9
Beta (1Y)0.97
Revenue Growth16.36%
EPS Growth-0.70%
CountryCA
Employees45,000
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)34.83
Shares Outstanding21,191,530
10 Day Avg. Volume56,132
30 Day Avg. Volume66,014
Financial Highlights & Ratios
PEG Ratio-3.40
Price to Book (P/B)14.28
Price to Sales (P/S)4.31
P/FCF Ratio19.84
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$3,991.68Price Target Upside51.98% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
EPS Forecast (FY)118.41
Revenue Forecast (FY)C$13.83B
Constellation Software Business Overview & Revenue Model
Company Description
Constellation Software Inc., through its various subsidiaries, focuses on the acquisition, development, and long-term management of niche software businesses. These specialized software enterprises operate across Canada, the United States, the Uni...
How the Company Makes Money
CSU primarily makes money by owning and operating many vertical market software companies that sell and support specialized, mission-critical software for niche end markets. Its key revenue streams are: (1) Recurring software revenue: A substantia...
Constellation Software Earnings Call Summary
Earnings Call Date:May 12, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 07, 2026
Earnings Call Sentiment Positive
The call balanced positive operational and strategic execution (notably active M&A, stable organic growth, leadership cohesion, and proactive AI and PEM approaches) against near-term margin pressures (Q1 acquisition drag, lower hardware margins, payroll/Synchronoss costs and higher third-party spend). Management presented these margin impacts as largely expected/temporary and emphasized improvement plans, while reiterating disciplined capital deployment and a stable compensation policy.Positive Updates
Active M&A Momentum
Management reported a strong start to the year on the M&A front with multiple Q1 and Q2 transactions closed or pending (including Derbysoft). There were a couple of larger-than-typical deals (amounts not disclosed) plus many smaller acquisitions, and the company emphasized continued disciplined deployment of capital.
Negative Updates
Margin Drag from Q1 Acquisition Cohort
The Q1 cohort of acquisitions was a negative-margin cohort and represented a notable drag on consolidated margins for the quarter; management expects to improve margins on those deals over time.
Read all updates
Q1-2026 Updates
Positive
Negative
Active M&A Momentum
Management reported a strong start to the year on the M&A front with multiple Q1 and Q2 transactions closed or pending (including Derbysoft). There were a couple of larger-than-typical deals (amounts not disclosed) plus many smaller acquisitions, and the company emphasized continued disciplined deployment of capital.
Read all positive updates
Company Guidance
Management gave limited forward guidance but did provide several quantified signposts for Q1 2026: hardware gross margin was 43% versus 46% (about a 20 basis‑point negative impact on overall margins), and they flagged Q1 payroll taxes, Synchronoss‑related costs, a Q1 cohort of acquisitions that were margin‑negative, plus higher professional‑services and third‑party‑maintenance spend as quarter drags; organic growth was described as in line with historical norms, management said acquisition margins should improve over time, M&A activity has been strong early in the year (including Derbysoft and a couple of larger but undisclosed deals), there are no changes to the bonus/share‑buyback plan, PEM minority investments keep the same hurdle rate (though reporting may shift to reflect pro‑rata cash flows since current free cash flow‑to‑shareholder metrics don’t capture PEM returns).Constellation Software Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
64
Positive
Cash Flow
83
Very Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 12.15B | 11.83B | 10.07B | 8.41B | 6.62B | 5.11B |
| Gross Profit | 5.28B | 4.68B | 3.62B | 2.95B | 2.32B | 1.88B |
| EBITDA | 3.09B | 2.59B | 1.97B | 1.60B | 1.25B | 1.11B |
| Net Income | 738.68M | 520.96M | 731.00M | 565.00M | 512.00M | 310.00M |
Balance Sheet | ||||||
| Total Assets | 16.98B | 16.14B | 12.86B | 10.78B | 7.95B | 5.71B |
| Cash, Cash Equivalents and Short-Term Investments | 3.02B | 3.14B | 1.99B | 1.29B | 935.08M | 794.46M |
| Total Debt | 5.56B | 5.78B | 4.53B | 4.46B | 2.31B | 1.38B |
| Total Liabilities | 12.37B | 11.88B | 9.57B | 8.84B | 6.00B | 4.21B |
| Stockholders Equity | 3.89B | 3.57B | 2.79B | 1.86B | 1.73B | 1.05B |
Cash Flow | ||||||
| Free Cash Flow | 2.64B | 2.57B | 1.89B | 1.63B | 1.15B | 1.22B |
| Operating Cash Flow | 2.71B | 2.64B | 1.95B | 1.68B | 1.19B | 1.24B |
| Investing Cash Flow | -2.39B | -1.97B | -1.52B | -1.67B | -1.65B | -1.22B |
| Financing Cash Flow | 153.29M | 358.16M | 277.98M | 456.28M | 540.42M | -983.21K |
Constellation Software Technical Analysis
Neutral
2626.45
Price Trends
2624.11
Positive
2580.11
Positive
3109.36
Negative
Market Momentum
119.10
Negative
56.50
Neutral
70.15
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CSU, the sentiment is Neutral. The current price of 2626.45 is below the 20-day moving average (MA) of 2833.47, above the 50-day MA of 2624.11, and below the 200-day MA of 3109.36, indicating a neutral trend. The MACD of 119.10 indicates Negative momentum. The RSI at 56.50 is Neutral, neither overbought nor oversold. The STOCH value of 70.15 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:CSU.
Constellation Software Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | C$4.57B | 38.60 | 19.72% | ― | 16.06% | 744.14% | |
75 Outperform | C$8.84B | 35.40 | 10.76% | ― | 11.62% | 19.63% | |
74 Outperform | C$872.52M | 12.06 | 11.48% | 5.69% | -4.08% | -7.65% | |
69 Neutral | C$7.41B | 10.72 | 12.93% | 3.27% | -0.86% | -16.61% | |
67 Neutral | C$64.81B | 59.94 | 20.79% | 0.17% | 16.36% | -0.70% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
58 Neutral | C$1.86B | -9.28 | -9.59% | ― | 13.25% | 77.06% |
* Technology Sector Average
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Constellation Software Corporate Events
Business Operations and StrategyFinancial Disclosures
Constellation Software Sets May 13 Call to Review First-Quarter Results
Neutral
Apr 15, 2026
Constellation Software Inc. plans to release its first-quarter results after the Toronto Stock Exchange closes on May 12, 2026, with the figures to be shared via press release and posted on its website and the SEDAR+ platform. The company will fol...
Business Operations and StrategyM&A Transactions
Constellation’s Vela Unit to Acquire Majority Stake in DerbySoft
Positive
Apr 15, 2026
Constellation Software’s Vela Operating Group, via its Juniper Group unit, has entered into a definitive agreement to acquire a majority interest in Derbysoft Holdings Limited, the parent of DerbySoft Inc. The deal, which remains subject to ...
Business Operations and StrategyShareholder Meetings
Constellation Software, Topicus and Lumine Set Joint Hybrid AGMs and Q&A for May 15
Positive
Apr 10, 2026
Constellation Software, along with affiliates Topicus.com and Lumine Group, will hold their annual shareholder meetings on May 15, 2026 in Toronto using a hybrid in-person and webcast format. Topicus will convene at 8:00 a.m. ET, Lumine at 8:15 a....
Business Operations and StrategyExecutive/Board Changes
Constellation Founder Mark Leonard to Step Down From Board, Remain Advisor
Neutral
Mar 28, 2026
Constellation Software announced that founder and former president Mark Leonard will not stand for re-election to the board of directors, with his term ending after the May 15, 2026 annual shareholders’ meeting. Leonard will remain closely i...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.