Constellation Software (CSU.TO)
Technology · TSX · Canada
Fundamentals
Valuation and ratings
Constellation Software trades at C$2,825.42, close to the C$2,717.91 our discounted cash flow model puts on the business. On this measure the market and the model broadly agree, so the interesting question is which of them is wrong.
Our moat model scores it 59 out of 100, which is a moat, but not a deep one. A moat is a structural reason competitors cannot take the profits away, and it matters more to a long holding period than any single quarter's numbers do.
It changes hands at 56.2 times earnings. Be careful reading that in isolation: for a cyclical business a low P/E arrives at the top of the cycle, when profits are peaking and about to fall, which is exactly when the shares look cheapest and are not.
About Constellation Software
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 licensing; and sale of hardware activities. The company also offers professional services consist of implementation services, custom programming, product training, managed services, and consulting services; maintenance and customer support services, and hosted software-as-a-service products; and other recurring services. It operates in Canada, the United States, the United Kingdom, Europe, and internationally. The company was incorporated in 1995 and is headquartered in Toronto, Canada.
CSU.TO passes 2 of our 30 screens today
Each screen prints the exact criteria it used, and the circumstances in which it is wrong.
Common questions
Is Constellation Software (CSU.TO) undervalued?
Against our discounted cash flow estimate of C$2,717.91, CSU.TO at C$2,825.42 is 4% above fair value. That is one model's answer, not a recommendation, and most of a DCF's output sits in a terminal value nobody can forecast.
What is CSU.TO's P/E ratio?
CSU.TO trades at 56.2 times earnings. A low P/E is not automatically cheap: on a cyclical company it is usually a warning that earnings are at a peak.
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Data from company filings, exchange quotes and SEC EDGAR 13F disclosures. Quotes are delayed. Metrics we do not have are left out rather than estimated. Educational information, not financial advice.