Constellation Software (CSU) AI Stock Analysis

• Market Cap: C$71.52B
• Dividend Yield: 0.17%
• Average Volume (3M): 66.01K
• Price to Earnings (P/E): 76.8
• Beta (1Y): 1.16
• Revenue Growth: 18.24%
• EPS Growth: 7.72%
• Country: CA
• Employees: 45,000
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 27.72
• Shares Outstanding: 21,191,530
• 10 Day Avg. Volume: 56,132
• 30 Day Avg. Volume: 66,014
• PEG Ratio: 3.05
• Price to Book (P/B): 23.43
• Price to Sales (P/S): 6.50
• P/FCF Ratio: 34.66
• 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$4,997.14
• Price Target Upside: 48.06% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 7
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 72 Outperform
• Price Target: C$3,692.00 ▲(9.39% Upside)

Constellation Software's overall stock score is driven by its strong financial performance and strategic acquisitions, which enhance its growth prospects. However, the high P/E ratio and technical indicators suggest caution due to potential overvaluation and bearish momentum. The company's ability to effectively manage its leverage and continue its growth trajectory will be key to future performance.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective business strategies, enhancing long-term financial stability.

Cash Generation

Strong cash generation capabilities provide financial flexibility and support for future investments and acquisitions.

Strategic Acquisitions

Strategic acquisitions expand product offerings and market reach, strengthening competitive position and driving long-term growth.

Negative Factors

High Leverage

High leverage can increase financial risk and limit flexibility, potentially impacting the company's ability to invest in growth opportunities.

Profit Margin Pressure

Decreasing profit margins may indicate rising costs or pricing pressures, which could affect long-term profitability if not addressed.

Leadership Transition

Leadership changes can create uncertainty and disrupt strategic direction, potentially impacting operational execution and company culture.

Constellation Software Business Overview & Revenue Model

Company Description

Constellation Software Inc. (CSU) is a Canadian company that specializes in acquiring, managing, and building software businesses across various sectors, including public and private sectors, healthcare, and financial services. Founded in 1998, CSU operates through numerous subsidiaries, each focusing on specific vertical markets, providing tailored software solutions that enhance operational efficiency and customer engagement. The company's core offerings include enterprise resource planning (ERP) systems, customer relationship management (CRM) tools, and other specialized software solutions designed to meet the needs of diverse industries.

How the Company Makes Money

Constellation Software generates revenue primarily through software licensing, maintenance, and subscription services from its subsidiaries. The company follows a business model focused on acquiring established software firms and leveraging their products and client bases to drive growth. Key revenue streams include recurring revenue from maintenance contracts and subscriptions, as well as one-time fees from software sales and implementation services. Additionally, CSU benefits from cross-selling opportunities among its subsidiaries and strategic partnerships that enhance its product offerings and market reach, contributing to its overall financial performance.

Constellation Software Financial Statement Overview

Summary

Constellation Software exhibits strong financial health with consistent revenue growth and solid profitability metrics. While the company maintains a high level of leverage, it effectively generates returns on equity and converts earnings into cash. The financial statements reflect a well-managed company with a focus on growth and operational efficiency, though attention to debt levels is advisable.

Income Statement

Constellation Software has demonstrated consistent revenue growth, with a TTM revenue growth rate of 3.78%. The gross profit margin has improved significantly from 35.91% in 2024 to 50.75% in the TTM period, indicating enhanced operational efficiency. However, the net profit margin has slightly decreased to 6.16% from 7.26% in 2024, suggesting some pressure on net profitability. The EBIT and EBITDA margins remain stable, reflecting solid core earnings performance.

Balance Sheet

The company's debt-to-equity ratio is relatively high at 1.57, indicating significant leverage, which could pose risks if not managed properly. However, the return on equity is strong at 21.78%, showcasing effective use of equity to generate profits. The equity ratio of 22.63% suggests a moderate reliance on equity financing.

Cash Flow

Constellation Software has shown robust free cash flow growth of 9.66% in the TTM period, highlighting strong cash generation capabilities. The operating cash flow to net income ratio of 0.45 indicates efficient conversion of earnings into cash. The free cash flow to net income ratio is high at 0.97, suggesting that the company effectively translates its earnings into free cash flow.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	11.15B	10.07B	8.41B	6.62B	5.11B	3.97B
Gross Profit	5.66B	3.62B	2.95B	2.32B	1.88B	1.49B
EBITDA	2.34B	1.97B	1.60B	1.25B	1.11B	859.00M
Net Income	687.00M	731.00M	565.00M	512.00M	310.00M	436.00M
Balance Sheet
Total Assets	15.33B	12.86B	10.78B	7.95B	5.71B	4.37B
Cash, Cash Equivalents and Short-Term Investments	2.80B	1.99B	1.29B	935.08M	794.46M	765.46M
Total Debt	5.44B	4.53B	4.46B	2.31B	1.38B	723.54M
Total Liabilities	11.22B	9.57B	8.84B	6.00B	4.21B	3.32B
Stockholders Equity	3.47B	2.79B	1.86B	1.73B	1.05B	1.05B
Cash Flow
Free Cash Flow	2.50B	1.89B	1.63B	1.15B	1.22B	1.19B
Operating Cash Flow	2.57B	1.95B	1.68B	1.19B	1.24B	1.21B
Investing Cash Flow	-1.95B	-1.52B	-1.67B	-1.65B	-1.22B	-540.06M
Financing Cash Flow	44.16M	277.98M	456.28M	540.42M	-983.21K	-225.90M

Constellation Software Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 3375.08
• 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:CSU, the sentiment is Negative. The current price of 3375.08 is above the 20-day moving average (MA) of 3331.07, below the 50-day MA of 3453.02, and below the 200-day MA of 4360.38, indicating a bearish trend. The MACD of -35.44 indicates Negative momentum. The RSI at 45.61 is Neutral, neither overbought nor oversold. The STOCH value of 71.88 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:CSU.

Constellation Software Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DSG	79 Outperform	$10.63B	49.50	10.70%	―	14.55%	15.55%
KXS	78 Outperform	C$4.95B	102.60	8.24%	―	15.11%	75.40%
CSU	72 Outperform	C$71.52B	76.78	22.10%	0.17%	18.24%	7.72%
OTEX	72 Outperform	C$11.61B	17.27	12.32%	3.25%	-5.01%	13.21%
ENGH	69 Neutral	C$1.12B	15.35	12.20%	5.66%	-0.72%	-9.27%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
LSPD	53 Neutral	C$2.25B	-2.61	-37.01%	―	17.23%	-435.45%

Constellation Software Corporate Events

Lumine Group to Acquire Synchronoss Technologies in Strategic Expansion

Constellation Software’s Lumine Group has announced a definitive agreement to acquire Synchronoss Technologies for approximately $116.4 million. This acquisition, expected to close in the first half of 2026, will complete Synchronoss’ transformation and enhance its cloud services, providing new opportunities for employees and improved capabilities for customers. The acquisition marks Lumine Group’s first public company purchase, reinforcing its strategy to protect and grow acquired brands.

Constellation Software’s Harris Group Acquires TECVIA Holding

Constellation Software’s Harris Operating Group has successfully completed the acquisition of TECVIA Holding GmbH. This acquisition is expected to enhance Constellation’s portfolio in the vertical market software industry, potentially strengthening its market position and offering new opportunities for growth.

Constellation Software Reports Strong Q3 2025 Results and Declares Dividend

Constellation Software Inc. reported a robust financial performance for the third quarter of 2025, with a 16% increase in revenue to $2,948 million and a 28% rise in net income attributable to common shareholders. The company completed several acquisitions, contributing to its growth, and declared a $1.00 per share dividend. The results indicate strong operational cash flows and free cash flow available to shareholders, reflecting the company’s effective growth strategy and solid market positioning.

Constellation Software to Release Q3 Results with New Q&A Approach

Constellation Software Inc. announced it will release its third quarter results on November 7, 2025, after markets close. The company has discontinued conference calls for quarterly financial results, opting instead for a Q&A facility on its website where shareholders can submit questions. This initiative aims to provide ongoing access to information about the company’s strategy and operations, potentially enhancing transparency and engagement with stakeholders.

Constellation Software’s Harris Group to Acquire TECVIA Holding GmbH

Constellation Software’s Harris operating group has entered into an agreement to acquire TECVIA Holding GmbH, pending closing conditions. This acquisition is expected to enhance Constellation’s portfolio in the vertical market software industry, potentially strengthening its market position and offering new opportunities for growth.

Topicus.com Completes Strategic Acquisition of Asseco Poland Shares

Topicus.com Inc., a subsidiary of Constellation Software Inc., has completed the acquisition of 14.84% of treasury shares in Asseco Poland S.A., following regulatory approvals. This acquisition, along with a previously acquired 9.99% stake, strengthens Topicus’ influence in Asseco, with a shareholders’ agreement now effective, potentially enhancing its strategic positioning in the European software market.

Topicus.com Completes Strategic Acquisition in Asseco Poland

Constellation Software Inc. and Topicus.com Inc. have announced the completion of Topicus’ acquisition of 14.84% of treasury shares in Asseco Poland S.A. This follows a previous acquisition of 9.99% of issued shares and the signing of a shareholders’ agreement with the Adam Góral Family Foundation. The acquisition solidifies Topicus’ position in the European software market, enhancing its strategic influence within Asseco and potentially impacting its growth trajectory.

Leadership Transition at Constellation Software: Mark Leonard Resigns, Mark Miller Appointed President

Constellation Software Inc. announced the resignation of Mark Leonard from his position as President due to health reasons, with Mark Miller, the current Chief Operating Officer, appointed as the new President. Leonard will remain on the Board of Directors, and the transition is expected to be seamless, with confidence expressed in Miller’s leadership to continue the company’s successful trajectory.

Constellation Software to Host AI Impact Q&A Webcast

Constellation Software Inc. has announced a live shareholder Q&A webcast to discuss the impact of Artificial Intelligence on software businesses, scheduled for September 22, 2025. The session, prompted by a shareholder’s inquiry, aims to address uncertainties surrounding AI for employees, shareholders, and customers, featuring a panel of AI specialists from within the company to provide insights.