Constellation Software, Inc. (CSU) Stock Recommendation | Score, Valuation, Technicals & Financial Trend

Score

Click here to find our call on this stock

Strong Sell

Sell

Hold

Buy

Strong Buy

Comparison

Company

Score

Quality

Valuation

Financial

Technical

Open Text Corp.

The Descartes Systems Group, Inc.

Kinaxis, Inc.

Enghouse Systems Ltd.

BlackBerry Ltd.

Constellation Software, Inc.

Topicus.com, Inc.

Lumine Group, Inc.

Dye & Durham Ltd.

Lightspeed Commerce, Inc.

Docebo, Inc.

Why is Constellation Software, Inc. ?

Strong Long Term Fundamental Strength with an average Return on Capital Employed (ROCE) of 40.20%

Healthy long term growth as Net Sales has grown by an annual rate of 24.71% and Operating profit at 25.25%
Company's ability to service its debt is strong with a healthy EBIT to Interest (avg) ratio of 9.15

Positive results in Jun 25

OPERATING CASH FLOW(Y) Highest at CAD 3,311.93 MM
NET SALES(Q) Highest at CAD 3,935.82 MM
INTEREST COVERAGE RATIO(Q) Highest at 1,133.8

With ROE of 27.87%, it has a very expensive valuation with a 20.52 Price to Book Value

The stock is trading at a premium compared to its peers' average historical valuations
Over the past year, while the stock has generated a return of -10.99%, its profits have risen by 59.2% ; the PEG ratio of the company is 1.2

Majority shareholders : FIIs

Underperformed the market in the last 1 year

Even though the market (S&P/TSX 60) has generated returns of 22.54% in the last 1 year, the stock has hugely underperformed and has generate negative returns of -10.99% returns

Real-Time Research Report

Verdict Report

How much should you hold?

Overall Portfolio exposure to Constellation Software, Inc. should be less than 10%
Overall Portfolio exposure to Software Products should be less than 30%

(If sector exposure > 30%, please use optimiser tool to see which are the best stocks to hold in Software Products)

When to exit? - We will constantly monitor the company and suggest at the appropriate time to exit from the stock

Is Constellation Software, Inc. for you?

Medium Risk, High Return

Absolute

Risk Adjusted

Volatility

Constellation Software, Inc.

-44.48%

10.45

27.80%

S&P/TSX 60

29.97%

1.54

14.62%

Quality

Management Risk

Growth

Capital Structure

Quality grade scale :

Below Average, Average, Good, Excellent

Quality key factors

Factor

Value

Sales Growth (5y)

25.01%

EBIT Growth (5y)

23.96%

EBIT to Interest (avg)

9.15

Debt to EBITDA (avg)

0.59

Net Debt to Equity (avg)

0.65

Sales to Capital Employed (avg)

1.37

Tax Ratio

20.40%

Dividend Payout Ratio

16.46%

Pledged Shares

Institutional Holding

0.09%

ROCE (avg)

40.20%

ROE (avg)

40.38%

Valuation

Valuation Scorecard

Valuation grade scale :

Very Risky, Risky, Very Expensive, Expensive, Fair, Attractive, Very Attractive

Valuation Key Factors

Factor

Value

P/E Ratio

Industry P/E

Price to Book Value

11.22

EV to EBIT

21.98

EV to EBITDA

12.71

EV to Capital Employed

7.15

EV to Sales

3.59

PEG Ratio

Dividend Yield

ROCE (Latest)

32.54%

ROE (Latest)

24.39%

Technicals

Technical key factors

Indicator

Weekly

Monthly

MACD

Mildly Bullish

Bearish

RSI

No Signal

Bullish

Bollinger Bands

Bearish

Moving Averages

Bearish (Daily)

KST

Mildly Bullish

Bearish

Dow Theory

No Trend

OBV

No Trend

Technical Indicator Scale: Bearish, Mildly Bearish, Sideways, Mildly Bullish, Bullish Turned

Technical Movement

Analyse All Technical Factors

Financial Trend

Financial Trend Scorecard

Financial Trend scale:

Very Negative, Negative, Flat, Positive, Very Positive, Outstanding

11What is working for the Company

OPERATING CASH FLOW(Y)

Highest at CAD 3,671.55 MM

DEBT-EQUITY RATIO (HY)

Lowest at 65.6 %

RAW MATERIAL COST(Y)

Fallen by 1.54% (YoY

CASH AND EQV(HY)

Highest at CAD 8,510.32 MM

NET PROFIT(Q)

Highest at CAD 428.66 MM

EPS(Q)

Highest at CAD 23.76

-5What is not working for the Company

ROCE(HY)

Lowest at 20.88%

DIVIDEND PAYOUT RATIO(Y)

Lowest at 5.84%

DEBTORS TURNOVER RATIO(HY)

Lowest at 5.3 times

OPERATING PROFIT MARGIN(Q)

Lowest at 26.41 %

Here's what is working for Constellation Software, Inc.

Operating Cash Flow

Highest at CAD 3,671.55 MM and Grown

In each year in the last three years

MOJO Watch

The company has generated higher cash revenues from business operations

Operating Cash Flows (CAD MM)

Debt-Equity Ratio

Lowest at 65.6 % and Grown

In each half year in the last five Semi-Annual periods

MOJO Watch

The company has been reducing its borrowing as compared to equity capital

Debt-Equity Ratio

Net Profit

Highest at CAD 428.66 MM

in the last five periods

MOJO Watch

Near term Net Profit trend is positive

Net Profit (CAD MM)

Net Profit

At CAD 428.66 MM has Grown at 63.91%

Year on Year (YoY)

MOJO Watch

Near term Net Profit trend is positive

Net Profit (CAD MM)

EPS

Highest at CAD 23.76

in the last five periods

MOJO Watch

Increasing profitability; company has created higher earnings for shareholders

EPS (CAD)

Cash and Eqv

Highest at CAD 8,510.32 MM

in the last six Semi-Annual periods

MOJO Watch

Short Term liquidity is improving

Cash and Cash Equivalents

Raw Material Cost

Fallen by 1.54% (YoY)

MOJO Watch

The company's ability to pass on the cost of raw materials to customers has improved; this may lead to a rise in profit margin

Raw Material Cost as a percentage of Sales

Depreciation

Highest at CAD 522.62 MM

in the last five periods

MOJO Watch

The expenditure on assets done by the company may have gone into operation

Depreciation (CAD MM)

Here's what is not working for Constellation Software, Inc.

Operating Profit Margin

Lowest at 26.41 %

in the last five periods

MOJO Watch

Company's profit margin has deteriorated

Operating Profit to Sales

Debtors Turnover Ratio

Lowest at 5.3 times

in the last five Semi-Annual periods

MOJO Watch

Company's pace of selling Debtors has slowed

Debtors Turnover Ratio

Dividend Payout Ratio

Lowest at 5.84%

in the last five years

MOJO Watch

Company is distributing lower proportion of profits generated as dividend

DPR (%)