One-glance verdict
Undervalued
$7,607.76 our estimate vs market $2,836.43
Wall Street consensus: $3,980.50 (-47.7% lower than our fair-value estimate)
63% below our estimate, below the bear case
Fundamentals snapshot
Constellation Software Inc.
CSU.TO · TOR · Technology · Software - Application
Current price
$2,836.43
52-week range
$2,196.00 - $4,500.00
Market cap
$60.11B
Balance sheet
Watch
8.23x Adequate
Net debt $4.10B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Revenue grew 15.5% last year.
- Reward Returns 23.3% on equity, ahead of 83% of its peers.
- Risk Net debt grew 94.3% over 3 years.
- Risk Operating margin compressed from 15.6% to 15.1% over 3 years.
What this company does
Constellation Software Inc.
Constellation Software is a company that buys and permanently holds a large collection of smaller software businesses, each serving a specific niche like managing a city's public transit or a local winery. The company makes most of its money from recurring revenue (predictable, subscription-like payments that customers make for software updates and support), which creates a very stable cash flow. This steady stream of money allows Constellation to keep buying more of these small, essential software companies to fuel its growth.
How the company got here
Constellation Software was started in 1995 by Mark Leonard, who used to be a venture capitalist (someone who invests in young, promising companies). Instead of building one single software product, his idea was to buy many small, specialized software businesses and hold onto them forever. The company went public in 2006, which allowed it to raise more money to buy even more companies. This strategy of acquiring and holding has been very successful, and the company has now bought over 850 businesses that serve very specific industries.
What it actually does
Constellation doesn't sell one main product with its name on it; instead, it owns a huge collection of over a thousand smaller software companies. Each of these companies creates and sells "mission-critical" software, which is software that is absolutely essential for a specific industry's daily operations, like a billing system for a local utility company or a management system for a construction business. Constellation makes money primarily from recurring fees, like maintenance and support contracts, which make up the bulk of its sales. It also earns revenue from professional services (like helping customers install the software) and from selling software licenses.
Volaris Group
This is one of Constellation's largest and most diverse divisions, buying software companies that serve a wide variety of industries all over the world. Think of software for agribusiness, financial services, and education. The Volaris Group is known for being a generalist, meaning it doesn't stick to just one type of industry. It acts as a major growth engine for Constellation by constantly finding and acquiring new businesses in different niche markets.
Harris Computer Systems
The Harris group primarily focuses on selling software to the public sector. Its customers are organizations like local governments, schools, hospitals, and public utility companies. For example, a Harris company might make the software that a city uses to manage its water billing or that a school district uses to manage student records. This segment provides very stable and predictable income because government and public-sector clients tend to be very long-term customers.
Jonas Software
The Jonas group acquires software businesses in a number of specific areas, with a strong presence in hospitality (like software for managing golf clubs or spas) and construction. It also serves industries like food service and industrial markets. This group is a good example of Constellation's strategy of finding a niche market and buying leading software providers within it. By owning multiple companies in a specific vertical, Jonas becomes an expert in that field.
Perseus Operating Group
The Perseus group operates a collection of software companies across another diverse set of industries. These include businesses that make software for home builders, dealerships (like for cars or tractors), and real estate companies. Like Constellation's other groups, Perseus buys companies with the intention of holding them for the long term. It provides a permanent home for these specialized software businesses, allowing them to continue serving their customers while benefiting from Constellation's financial strength and management expertise.
What management is betting on now
The company's main strategy is to continue doing what it has done successfully for decades: buying more vertical market software businesses. Management is focused on disciplined capital allocation (the process of deciding where to invest the company's money for the best long-term results) to generate strong cash flows. A key part of the strategy is its decentralized model, which means they let the founders and managers of the companies they buy continue to run their businesses independently. This approach empowers local leaders and allows Constellation to manage a vast and diverse portfolio of companies effectively.
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $7,607.76 vs current price $2,836.43
Wall Street consensus is the average analyst price target: $3,980.50 (-47.7% lower than our fair-value estimate).
Our most-likely fair value is $7,607.76 a share — about 168.2% above today's price of $2,836.43, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Watch
Net debt $4.1B. Interest coverage 8.2x.
Net debt
$4.10B
Interest coverage
8.23x
Constellation Software Inc.'s profit covers its interest bill about 8.2 times over. which is stronger than most peers shown here.
Watch
Worse cushion
Baseline
Better cushion
CSU.TO
BASELINE
Constellation Software Inc.
Total debt $8.15B Interest coverage 8.23x This is the baseline the peer rows are being compared against.
Total debt $11.32B Interest coverage 6.88x -16% vs CSU.TO Carries about 1.2x less debt cushion than CSU.TO.
Total debt $3.60B Interest coverage 5.98x -27% vs CSU.TO Carries about 1.4x less debt cushion than CSU.TO.
Total debt $1.46B Interest coverage 71.61x +770% vs CSU.TO Carries about 8.7x more debt cushion than CSU.TO.
Total debt $7.78B Interest coverage 3.31x -60% vs CSU.TO Carries about 2.5x less debt cushion than CSU.TO.
Total debt $5.97B Interest coverage 3.45x -58% vs CSU.TO Carries about 2.4x less debt cushion than CSU.TO.
What you should know
The case for and against CSU.TO
3 Rewards
2 Risks
Rewards
-
Revenue grew 15.5% last year.
-
Returns 23.3% on equity, ahead of 83% of its peers.
-
Free cash flow was positive in 4/10 years.
Risks
-
Net debt grew 94.3% over 3 years.
-
Operating margin compressed from 15.6% to 15.1% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
45.12x
Forward P/E
15.46x
P/B
10.47x
P/S
4.76x
EV/EBITDA
27.83x
PEG ratio
0.48x
Profitability
How much profit each dollar creates
Gross margin
37.3%
Operating margin
15.1%
Net margin
7.6%
ROE
23.3%
ROA
7.7%
Health
Liquidity and balance-sheet strength
Debt / equity
1.20x
Current ratio
0.90x
Quick ratio
0.82x
Total debt
$8.15B
Total cash
$4.04B
Growth
How the business has been compounding
Revenue TTM
$17.68B
Revenue 5Y CAGR
20.6%
EPS TTM
62.86
EPS 5Y CAGR
-0.0%
Cash flow
How much cash the business throws off
Operating CF TTM
$3.82B
Free CF TTM
$3.73B
FCF margin
21.1%
Dividend
Shareholder payout
Yield
0.2%
Payout ratio
8.8%
Last ex-div date
2026-09-18