Constellation Software (CSU) AI Stock Analysis

• Market Cap: C$50.19B
• Dividend Yield: 0.17%
• Average Volume (3M): 66.01K
• Price to Earnings (P/E): 54.8
• Beta (1Y): 1.22
• Revenue Growth: 18.24%
• EPS Growth: 7.72%
• Country: CA
• Employees: 45,000
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 27.34
• 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$4,222.67
• Price Target Upside: 75.44% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 62 Neutral
• Price Target: C$2,426.00 ▲(0.79% Upside)
• Action: Downgraded Date: 02/04/26
• Date: Action: Downgraded 02/04/26

The score is supported by strong financial performance (margin improvement, solid cash generation, and high ROE), but is weighed down by very bearish technicals (below major moving averages with negative MACD) and a demanding valuation (high P/E with minimal dividend yield).

Positive Factors

Vertical Market Software Model

Constellation’s VMS model buys and operates niche, mission‑critical software with long customer relationships and recurring maintenance/subscription streams. This creates durable revenue stickiness, diversified end markets, and lower churn versus generic software, supporting steady cashflow over months.

Improving Gross Margins

A large gross margin jump signals better product mix, pricing power or cost control across acquired businesses. Sustained higher gross margins enhance operating leverage, providing a structural cushion for reinvestment and acquisition funding over the medium term despite near‑term noise.

Strong Cash Generation

Robust FCF growth and a FCF-to-net income ratio near 1 indicate high quality earnings and excellent cash conversion. This durable cash generation funds acquisitions, R&D and returns to shareholders while providing flexibility to manage leverage and absorb integration costs.

Negative Factors

Elevated Leverage

A 1.57 debt/equity ratio and modest equity ratio (22.63%) mean financial leverage is material. High leverage raises interest and refinancing exposure, constrains optionality for large deals or buybacks, and increases downside risk if cash generation weakens over a 2–6 month horizon.

Net Margin Pressure

Despite gross margin gains, the decline in net margin suggests rising operating, integration or financing costs that compress bottom‑line. This structural pressure can limit retained earnings and free cash build if persistent, reducing room for reinvestment or deleveraging.

Acquisition Reliance / Integration Risk

Growth is materially driven by acquisitions and redeployment of cash. While strategic, this creates persistent integration, execution and allocation risks: inconsistent deal returns, cultural misfits, and variable organic growth across many small businesses can weigh on medium‑term performance.

Constellation Software Business Overview & Revenue Model

Company Description

Constellation Software Inc., together with its subsidiaries, acquires, builds, and manages vertical market software businesses in Canada, the United States, the United Kingdom, and rest of Europe. Its industry specific software businesses provide specialized and mission-critical software solutions. The company serves public and private sector markets. Constellation Software Inc. was incorporated in 1995 and is headquartered in Toronto, Canada.

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

Strong overall fundamentals: improved gross margin (35.91% in 2024 to 50.75% TTM) and solid free cash flow growth (9.66% TTM) with high FCF-to-net income (0.97). Offsetting factors include slightly lower net margin (6.16% vs. 7.26% in 2024) and elevated leverage (debt-to-equity 1.57), though ROE remains strong (21.78%).

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: 2406.97
• 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 2406.97 is below the 20-day moving average (MA) of 2434.91, below the 50-day MA of 2863.08, and below the 200-day MA of 3957.62, indicating a bearish trend. The MACD of -133.60 indicates Negative momentum. The RSI at 38.97 is Neutral, neither overbought nor oversold. The STOCH value of 62.96 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	72 Outperform	C$7.49B	35.06	10.70%	―	14.55%	15.55%
ENGH	69 Neutral	C$935.21M	12.71	12.20%	5.69%	-0.72%	-9.27%
KXS	67 Neutral	C$3.28B	68.86	8.24%	―	15.11%	75.40%
CSU	62 Neutral	C$50.19B	54.75	22.10%	0.17%	18.24%	7.72%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
OTEX	59 Neutral	C$8.24B	13.67	10.55%	3.27%	-5.01%	13.21%
LSPD	56 Neutral	C$1.69B	-1.87	-37.01%	―	17.23%	-435.45%

Constellation Software Corporate Events

Constellation Software Sets 2026 Interest Rate for Series 1 Debentures at 8.6%

Constellation Software Inc. has announced that the annual interest rate on its unsecured subordinated floating rate Series 1 debentures will be reset to 8.6% per annum effective March 31, 2026, based on the annual average change in Canada’s All-items Consumer Price Index plus 6.5%. The current 8.9% rate will remain in effect until March 30, 2026, after which the inflation-linked mechanism will continue to reset the debenture rate each March 31, providing investors with an income stream that adjusts annually in line with consumer price movements.

The most recent analyst rating on (TSE:CSU) stock is a Buy with a C$3158.00 price target. To see the full list of analyst forecasts on Constellation Software stock, see the TSE:CSU Stock Forecast page.

Constellation Software Appoints Mark Miller to Board of Directors

Constellation Software Inc. has announced the appointment of Mark Miller to its Board of Directors. Miller, who is the President of Constellation and Executive Chairman of the Volaris Group, has been with the company and its subsidiaries for over 30 years, highlighting his extensive experience and long-term commitment to the company. This appointment is likely to strengthen Constellation’s leadership and strategic direction, potentially impacting its operations and market positioning positively.

The most recent analyst rating on (TSE:CSU) stock is a Buy with a C$3692.00 price target. To see the full list of analyst forecasts on Constellation Software stock, see the TSE:CSU Stock Forecast page.

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.

The most recent analyst rating on (TSE:CSU) stock is a Buy with a C$5600.00 price target. To see the full list of analyst forecasts on Constellation Software stock, see the TSE:CSU Stock Forecast page.

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.

The most recent analyst rating on (TSE:CSU) stock is a Buy with a C$4500.00 price target. To see the full list of analyst forecasts on Constellation Software stock, see the TSE:CSU Stock Forecast page.

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.

The most recent analyst rating on (TSE:CSU) stock is a Hold with a C$3644.00 price target. To see the full list of analyst forecasts on Constellation Software stock, see the TSE:CSU Stock Forecast page.