CSU:TSXConstellation Software Inc. Analysis
Data as of 2026-05-13 - not real-time
CA$2,405.00
Latest Price
6/10Risk
Risk Level: Medium
Executive Summary
Constellation Software is trading at C$2,405, well below its 20‑day (C$2,512) and 50‑day (C$2,531) SMAs, with a bearish MACD (-14.86 vs signal -10.90) and a neutral RSI of 44, indicating limited upside momentum in the near term. The stock sits just above its nearest support at C$2,353 and faces a resistance around C$2,707, while volume has been trending down and 30‑day volatility is elevated at nearly 47%, suggesting a choppy price environment.
Fundamentally, the company is strong: revenue of C$11.6 B grew 17.5% YoY, operating margins sit at 17.7% and ROE is 15.5%. The forward PE of 13.2 is far below the industry average of 38.4, and a DCF model places fair value at C$3,286 – implying roughly 70% upside. Cash on hand (C$3.14 B) offsets a portion of the C$5.79 B debt, and a modest dividend yield of 0.23% with an 11% payout ratio appears sustainable.
Risk considerations include high short‑term price volatility and a bearish technical outlook, but the low beta (0.53) and solid balance sheet temper overall risk. Given the sizable valuation gap and strong growth profile, a medium‑ to long‑term buy stance is warranted, while short‑term positioning should remain cautious pending the upcoming earnings release.
Fundamentally, the company is strong: revenue of C$11.6 B grew 17.5% YoY, operating margins sit at 17.7% and ROE is 15.5%. The forward PE of 13.2 is far below the industry average of 38.4, and a DCF model places fair value at C$3,286 – implying roughly 70% upside. Cash on hand (C$3.14 B) offsets a portion of the C$5.79 B debt, and a modest dividend yield of 0.23% with an 11% payout ratio appears sustainable.
Risk considerations include high short‑term price volatility and a bearish technical outlook, but the low beta (0.53) and solid balance sheet temper overall risk. Given the sizable valuation gap and strong growth profile, a medium‑ to long‑term buy stance is warranted, while short‑term positioning should remain cautious pending the upcoming earnings release.
Market Outlook
Short Term
< 1 yearNeutral
Model confidence: 6/10
Key Factors
- Bearish technical indicators (price below SMAs, MACD negative)
- Proximity to support level at C$2,353
- Upcoming Q1 earnings announcement as a potential catalyst
Medium Term
1–3 yearsPositive
Model confidence: 8/10
Key Factors
- DCF implied upside of ~70% and forward PE of 13.2 vs industry 38.4
- Strong revenue growth (17.5%) and solid operating margins
- Analyst consensus strong‑buy with mean target above C$4,000
Long Term
> 3 yearsPositive
Model confidence: 9/10
Key Factors
- Sustainable dividend with low payout ratio and strong cash flow
- Resilient business model of acquiring vertical‑market software firms
- Low beta indicating limited systematic risk over extended horizons
Key Metrics & Analysis
Financial Health
Revenue Growth17.50%
Profit Margin4.41%
P/E Ratio50.3
ROE15.51%
ROA8.31%
Debt/Equity135.59
P/B Ratio10.5
Op. Cash FlowCA$2.7B
Free Cash FlowCA$2.6B
Industry P/E38.4
Technical Analysis
TrendBearish
RSI44.3
SupportCA$2,353.78
ResistanceCA$2,707.10
MA 20CA$2,512.31
MA 50CA$2,530.90
MA 200CA$3,309.44
MACDBearish
VolumeDecreasing
Fear & Greed Index89.48
Valuation
Fair ValueCA$3,286.09
Target PriceCA$4,092.26
Upside/Downside70.16%
GradeUndervalued
TypeGrowth
Dividend Yield0.23%
Risk Assessment
Beta0.53
Volatility46.77%
Sector RiskMedium
Reg. RiskLow
Geo RiskMedium
Currency RiskMedium
Liquidity RiskMedium
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This analysis may contain inaccuracies and is provided for informational and research purposes only. It is not personal investment advice, a recommendation, or an instruction to buy, sell, or hold any asset.