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Constellation Software
(TSX:CSU)
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Rating:67Neutral
Price Target:
C$3,258.00
▲(22.15% 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
Free Cash Flow Conversion
Very high FCF conversion (~0.97x of net income) indicates earnings quality and persistent cash generation. This durable cash flow supports sustained buybacks, bolt-on acquisitions, and reinvestment into R&D and integration capital, improving long-term resilience versus cyclical revenue swings.
Negative Factors
Elevated Leverage
Material leverage (debt-to-equity ~1.4x TTM) constrains financial flexibility. With operating cash flow covering only a modest portion of debt historically, higher leverage raises refinancing and interest-rate vulnerability and limits the firm’s cushion for weaker organic performance or larger opportunistic acquisitions.
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Positive Factors
Negative Factors
Free Cash Flow Conversion
Very high FCF conversion (~0.97x of net income) indicates earnings quality and persistent cash generation. This durable cash flow supports sustained buybacks, bolt-on acquisitions, and reinvestment into R&D and integration capital, improving long-term resilience versus cyclical revenue swings.
Read all positive factors
Constellation Software (CSU) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$63.64B
Dividend Yield0.19%
Average Volume (3M)66.01K
Price to Earnings (P/E)61.5
Beta (1Y)0.92
Revenue Growth16.36%
EPS Growth-0.70%
CountryCA
Employees69,000
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$3,993.81Price Target Upside49.74% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering8
EPS Forecast (FY)118.33
Revenue Forecast (FY)C$13.83B
Constellation Software Business Overview & Revenue Model
Company Description
Constellation Software Inc., together with its subsidiaries, acquires, builds, and manages vertical market software businesses to develop mission-critical software solutions for public and private sector markets. It is involved in the software lic...
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 11, 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.
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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
Positive
2667.24
Price Trends
2822.23
Positive
2663.24
Positive
2872.93
Positive
Market Momentum
51.02
Negative
58.38
Neutral
85.99
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CSU, the sentiment is Positive. The current price of 2667.24 is below the 20-day moving average (MA) of 2804.13, below the 50-day MA of 2822.23, and below the 200-day MA of 2872.93, indicating a bullish trend. The MACD of 51.02 indicates Negative momentum. The RSI at 58.38 is Neutral, neither overbought nor oversold. The STOCH value of 85.99 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 |
|---|---|---|---|---|---|---|---|
81 Outperform | C$4.59B | 39.95 | 19.72% | ― | 16.06% | 744.14% | |
74 Outperform | C$934.10M | 13.11 | 11.97% | 7.51% | -4.08% | -7.65% | |
73 Outperform | C$9.02B | 36.46 | 11.26% | ― | 11.62% | 19.63% | |
69 Neutral | C$8.62B | 12.36 | 12.93% | 4.81% | -0.86% | -16.61% | |
67 Neutral | C$63.64B | 61.50 | 20.79% | 0.21% | 16.36% | -0.70% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
61 Neutral | C$1.95B | -14.50 | -6.57% | ― | 10.59% | 84.91% |
* Technology Sector Average
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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.