Fact based stock research
Constellation Software (TSX:CSU)
CA21037X1006
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For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Constellation Software stock research in summary
ANALYSIS: With an Obermatt Combined Rank of 53 (better than 53% compared with investment alternatives), Constellation Software (Application Software, Canada) shares have above-average financial characteristics compared with similar stocks. Shares of Constellation Software are low in value (priced high) with a consolidated Value Rank of 31 (worse than 69% of alternatives). But they show above-average growth (Growth Rank of 93) and are safely financed (Safety Rank of 50, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 53, is a buy recommendation based on Constellation Software's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Constellation Software exhibits low value (Obermatt Value Rank of 31), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 93). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 50) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more
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360° Viewnew| Country | Canada |
| Industry | Application Software |
| Index | TSX Composite |
| Size class | X-Large |
19-Dec-2024. Stock data may be delayed. Log in or sign up to get the most recent research.
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Review the performance ranks of the individual metrics that form each investment strategy.
Research History: Constellation Software
| RESEARCH HISTORY | 2021 | 2022 | 2023 | 2024 | ||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 36 |
|
63 |
|
42 |
|
31 |
|
| GROWTH | ||||||||
| GROWTH | 70 |
|
71 |
|
77 |
|
93 |
|
| SAFETY | ||||||||
| SAFETY | 12 |
|
32 |
|
54 |
|
50 |
|
| SENTIMENT | ||||||||
| SENTIMENT | n/a |
|
79 |
|
65 |
|
new |
|
| 360° VIEW | ||||||||
| 360° VIEW | n/a |
|
77 |
|
86 |
|
new |
|
Combined financial peformance in Detail
ANALYSIS: With an Obermatt Combined Rank of 53 (better than 53% compared with investment alternatives), Constellation Software (Application Software, Canada) shares have above-average financial characteristics compared with similar stocks. Shares of Constellation Software are low in value (priced high) with a consolidated Value Rank of 31 (worse than 69% of alternatives). But they show above-average growth (Growth Rank of 93) and are safely financed (Safety Rank of 50, which means below-average debt burdens). ...read more
RECOMMENDATION: A Combined Rank of 53, is a buy recommendation based on Constellation Software's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Constellation Software exhibits low value (Obermatt Value Rank of 31), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 93). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 50) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more
| RESEARCH HISTORY | 2021 | 2022 | 2023 | 2024 | ||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 36 |
|
63 |
|
42 |
|
31 |
|
| GROWTH | ||||||||
| GROWTH | 70 |
|
71 |
|
77 |
|
93 |
|
| SAFETY | ||||||||
| SAFETY | 12 |
|
32 |
|
54 |
|
50 |
|
| COMBINED | ||||||||
| COMBINED | 30 |
|
54 |
|
61 |
|
53 |
|
Value Metrics in Detail
ANALYSIS: With an Obermatt Value Rank of 31 (worse than 69% compared with alternatives), Constellation Software shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for Constellation Software. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 79% of comparable companies, making the stock an attractive buy for dividend investors. However, dividend investors may get disappointed because all other critical financial indicators are below the market median: Price-to-Sales is 32 which means that the stock price compared with what market professionals expect for future profits is higher than 68% of comparable companies, indicating a low value concerning Constellation Software's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 28 which means that the stock price compared with what market professionals expect for future profit levels is higher than 72% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 8 is also low. Compared with invested capital, the stock price is higher than for 92% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 31, is a hold recommendation based on Constellation Software's stock price compared with the company's operational size and dividend yields. Should dividend investors pick Constellation Software? The company-reported financials speak against it. The company is expensive compared with revenue and invested capital levels, two reliable company size indicators. In addition, it currently has a low level of profits. How can future dividends be paid in the case that profits remain low? Dividend investors should choose Constellation Software only if they reasonably expect the low current profit levels to be transitory. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is essential in this case, as the financial indicators are inconclusive. ...read more
| VALUE METRICS | 2021 | 2022 | 2023 | 2024 | ||||
|---|---|---|---|---|---|---|---|---|
| PRICE VS. REVENUES (P/S) | ||||||||
| PRICE VS. REVENUES (P/S) | 42 |
|
47 |
|
38 |
|
32 |
|
| PRICE VS. PROFITS (P/E) | ||||||||
| PRICE VS. PROFITS (P/E) | 41 |
|
56 |
|
43 |
|
28 |
|
| PRICE VS. CAPITAL (Market-to-Book) | ||||||||
| PRICE VS. CAPITAL (Market-to-Book) | 1 |
|
9 |
|
3 |
|
8 |
|
| DIVIDEND YIELD | ||||||||
| DIVIDEND YIELD | 58 |
|
85 |
|
79 |
|
79 |
|
| CONSOLIDATED RANK: VALUE | ||||||||
| CONSOLIDATED RANK: VALUE | 36 |
|
63 |
|
42 |
|
31 |
|
Growth Metrics in Detail
ANALYSIS: With an Obermatt Growth Rank of 93 (better than 93% compared with alternatives) for 2024, Constellation Software shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with all four indicators above average for Constellation Software. Sales Growth has a value of 94, which means that, currently, professionals expect the company to grow more than 94% of its competitors. The same is valid for Profit Growth with a value of 68 and for Capital Growth with 92. In addition, Stock Returns had an above-average rank value of 69, which means they have been higher than 69% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 93, is a buy recommendation for growth and momentum investors. Since all Growth Ranks are positive, Constellation Software exhibits above-average growth momentum. This could be due to a uniquely strong market position, proprietary technology, or an extensive corporate acquisition strategy. Growth investors will find this an attractive investment opportunity, unless they expect that the current phase is transitory and will deteriorate in the future. The current performance could also be a temporary recovery from a very low point, such as a turn-around situation. In the case of a turn-around, the current performance may or may not be followed by a continuing positive development. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case. ...read more
| GROWTH METRICS | 2021 | 2022 | 2023 | 2024 | ||||
|---|---|---|---|---|---|---|---|---|
| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 62 |
|
29 |
|
83 |
|
94 |
|
| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 54 |
|
40 |
|
41 |
|
68 |
|
| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | n/a |
|
67 |
|
62 |
|
92 |
|
| STOCK RETURNS | ||||||||
| STOCK RETURNS | 77 |
|
87 |
|
73 |
|
69 |
|
| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 70 |
|
71 |
|
77 |
|
93 |
|
Safety Metrics in Detail
ANALYSIS: With an Obermatt Safety Rank of 50 (better than 50% compared with alternatives), the company Constellation Software has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Constellation Software is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for Constellation Software. Liquidity is at 82, meaning the company generates more profit to service its debt than 82% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 31, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 69% of its competitors. Leverage is also high at a rank of 24, which means that the company has an above-average debt-to-equity ratio. It has more debt than 76% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 50 (better than 50% compared with alternatives), Constellation Software has a financing structure that is safer than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. If the company is sailing with good winds, as may be visible from the Growth and Sentiment performance, the refinancing risk may be lower than the low Refinancing rank suggests. ...read more
| SAFETY METRICS | 2021 | 2022 | 2023 | 2024 | ||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 17 |
|
38 |
|
31 |
|
24 |
|
| REFINANCING | ||||||||
| REFINANCING | 21 |
|
1 |
|
19 |
|
31 |
|
| LIQUIDITY | ||||||||
| LIQUIDITY | 67 |
|
92 |
|
92 |
|
82 |
|
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 12 |
|
32 |
|
54 |
|
50 |
|
Sentiment Metrics in Detail
| SENTIMENT | 2021 | 2022 | 2023 | 2024 | ||||
|---|---|---|---|---|---|---|---|---|
| ANALYST OPINIONS | ||||||||
| ANALYST OPINIONS | n/a |
|
38 |
|
25 |
|
new |
|
| OPINIONS CHANGE | ||||||||
| OPINIONS CHANGE | n/a |
|
50 |
|
50 |
|
new |
|
| PRO HOLDINGS | ||||||||
| PRO HOLDINGS | n/a |
|
83 |
|
96 |
|
new |
|
| MARKET PULSE | ||||||||
| MARKET PULSE | n/a |
|
82 |
|
53 |
|
new |
|
| CONSOLIDATED RANK: SENTIMENT | ||||||||
| CONSOLIDATED RANK: SENTIMENT | n/a |
|
79 |
|
65 |
|
new |
|
Free stock analysis by the purely fact based Obermatt Method for Constellation Software from December 19, 2024.
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