Constellation Software Inc.

CSU-T

TSE:CSU

1,349.99
0.01 (0.00%)
Constellation Software is a diversified software company. It is based in Toronto, Canada, is listed on the Toronto Stock Exchange, and is a constituent of the S&P/TSX 60. The company was founded by Mark Leonard, a former venture capitalist, in 1995.
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Analysis and Opinions about CSU-T

Signal
Opinion
Expert
DON'T BUY
DON'T BUY
March 26, 2014

This is a growth/momentum name and is still above his model price of $220. This is a 16% downside. On any dip, it would be of interest to him but too expensive right here.

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This is a growth/momentum name and is still above his model price of $220. This is a 16% downside. On any dip, it would be of interest to him but too expensive right here.

TOP PICK
TOP PICK
March 18, 2014

(A Top Pick April 3/13. Up 113.04%.) Continues to rock. One of the best capital allocators in the market. A superb franchise. Fantastic management team. A stock that you could sleep at nights with. It should certainly be able to continue to outperform the market for the foreseeable future. Generates a lot of cash flow. Can see $350 in a year.

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(A Top Pick April 3/13. Up 113.04%.) Continues to rock. One of the best capital allocators in the market. A superb franchise. Fantastic management team. A stock that you could sleep at nights with. It should certainly be able to continue to outperform the market for the foreseeable future. Generates a lot of cash flow. Can see $350 in a year.

BUY
BUY
January 31, 2014

Stock has more than doubled over the last year. Their whole purpose in life is to basically acquire companies and take the free cash flow, ploughing it back into other companies. Free cash flow yield is 2%, which is a B minus compared to the whole database. Year-over-year earnings growth was up 32% in October. Estimates have risen by 5% over the last 90 days. Earnings are expected to grow by 27% this year, so the PE of 19X against that, gives you a .7 PE to growth ratio. Generally speaking, a PEG of less than 1 is considered attractive.

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Stock has more than doubled over the last year. Their whole purpose in life is to basically acquire companies and take the free cash flow, ploughing it back into other companies. Free cash flow yield is 2%, which is a B minus compared to the whole database. Year-over-year earnings growth was up 32% in October. Estimates have risen by 5% over the last 90 days. Earnings are expected to grow by 27% this year, so the PE of 19X against that, gives you a .7 PE to growth ratio. Generally speaking, a PEG of less than 1 is considered attractive.

BUY WEAKNESS
BUY WEAKNESS
January 14, 2014

(Market Call Minute.) This is a rollup, much the same as Valeant Pharmaceuticals (VRX-T) but Valeant is much cheaper. This stock closed at $223 and his model price is $181, 18% lower. Wait for a pullback.

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(Market Call Minute.) This is a rollup, much the same as Valeant Pharmaceuticals (VRX-T) but Valeant is much cheaper. This stock closed at $223 and his model price is $181, 18% lower. Wait for a pullback.

DON'T BUY
DON'T BUY
January 10, 2014

Quite phenomenal just how well this company has been run, and how well their acquisitions have improved their earnings. In making acquisitions, the challenge over a period of 5 years is finding big competitors that want to be acquired. These are the challenges this company is going to face over the next couple of years. This looks fully valued to him.

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Quite phenomenal just how well this company has been run, and how well their acquisitions have improved their earnings. In making acquisitions, the challenge over a period of 5 years is finding big competitors that want to be acquired. These are the challenges this company is going to face over the next couple of years. This looks fully valued to him.

BUY
BUY
December 30, 2013

Specialty software company that buys niche companies in niche businesses.

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Specialty software company that buys niche companies in niche businesses.

TOP PICK
TOP PICK
December 24, 2013

15 times cash earnings growing at at least 35%. Best performing large cap stock in Canada over the last 5 years. Made an acquisition a week ago that will contribute 15% growth on their current base of earnings.

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15 times cash earnings growing at at least 35%. Best performing large cap stock in Canada over the last 5 years. Made an acquisition a week ago that will contribute 15% growth on their current base of earnings.

HOLD
HOLD
December 19, 2013

Been a tremendous story. Likes the management team. Growth through acquisition. Multiple is high but they have done a good job. Don’t sell here.

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Been a tremendous story. Likes the management team. Growth through acquisition. Multiple is high but they have done a good job. Don’t sell here.

Peter Imhof

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Price
$216.670
Owned
Unknown
BUY
BUY
November 26, 2013

Fantastic company. Run very well making acquisitions of technology companies and rolling them in. Going to be a good stock for a long time. He has been waiting for an entry point for a long time. As they get bigger, they can make more and bigger acquisitions, accelerating their growth plans. Thinks they have a pretty decent runway for the next little while.

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Fantastic company. Run very well making acquisitions of technology companies and rolling them in. Going to be a good stock for a long time. He has been waiting for an entry point for a long time. As they get bigger, they can make more and bigger acquisitions, accelerating their growth plans. Thinks they have a pretty decent runway for the next little while.

DON'T BUY
DON'T BUY
October 29, 2013

Hit a new five-year high. Volume was 72,000 that is normally 33,000. Trending higher. He would be careful as it is a thin trader. There are some money managers that favour this stock. Any bad news on earnings and there will be a rush for the exits and he wouldn’t want to be in the way. Very expensive and he feels there are better places to be.

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Hit a new five-year high. Volume was 72,000 that is normally 33,000. Trending higher. He would be careful as it is a thin trader. There are some money managers that favour this stock. Any bad news on earnings and there will be a rush for the exits and he wouldn’t want to be in the way. Very expensive and he feels there are better places to be.

TOP PICK
TOP PICK
October 18, 2013

Look at the chart. Another good year for the chart, 10 fold rise since ’09. 39% return on equity. RBC raised their target price.

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Look at the chart. Another good year for the chart, 10 fold rise since ’09. 39% return on equity. RBC raised their target price.

HOLD
HOLD
October 1, 2013

Probably the smartest software guys in Canada, but smart from an acquisition standpoint. They are not focused on the growth side. Their whole thing is growth by acquisition. When a stock gets to be 14 or 15 times EBITDA he really looks for the Exit sign. He did on this one but was way too soon. Thinks it will always have a premier cachet to it. If it pulled back to $140, he would be looking to buy it.

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Probably the smartest software guys in Canada, but smart from an acquisition standpoint. They are not focused on the growth side. Their whole thing is growth by acquisition. When a stock gets to be 14 or 15 times EBITDA he really looks for the Exit sign. He did on this one but was way too soon. Thinks it will always have a premier cachet to it. If it pulled back to $140, he would be looking to buy it.

PARTIAL BUY
PARTIAL BUY
September 3, 2013

Their business model seems to be fairly firmly entrenched. They don’t really vary from the typical type of software companies that they are involved in. Smart management. He has been getting numbers above $171 stocks but it doesn’t seem to matter. If you don’t own, you could do a little.

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Their business model seems to be fairly firmly entrenched. They don’t really vary from the typical type of software companies that they are involved in. Smart management. He has been getting numbers above $171 stocks but it doesn’t seem to matter. If you don’t own, you could do a little.

BUY WEAKNESS
BUY WEAKNESS
August 27, 2013

A good, long-term stock and it is getting better with time. They acquire more software companies allowing them to make even bigger acquisitions. They take all of that and then funnel the free cash flow down. Has been waiting for a good entry point. Not overly expensive.

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A good, long-term stock and it is getting better with time. They acquire more software companies allowing them to make even bigger acquisitions. They take all of that and then funnel the free cash flow down. Has been waiting for a good entry point. Not overly expensive.

TOP PICK
TOP PICK
August 22, 2013

Best capital allocator management in Canada. Thinks the stock will go to $250 in the next 12 months. Only trading at 12.5X earnings.

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Best capital allocator management in Canada. Thinks the stock will go to $250 in the next 12 months. Only trading at 12.5X earnings.

HOLD
HOLD
August 7, 2013

His model prices $148.96, a -4% or -5%. Would love to see some sort pullback.

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His model prices $148.96, a -4% or -5%. Would love to see some sort pullback.

COMMENT
COMMENT
August 2, 2013

Very acquisitive and there are concerns that acquisition targets could run out but these are very small companies that are tucked in. They retain management and continue to do well. Historically they have been extremely good. Three-year cash flow has grown quite well. Margins are good. ROE is extremely high. Sales growth is at the end of July was a 45%.

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Very acquisitive and there are concerns that acquisition targets could run out but these are very small companies that are tucked in. They retain management and continue to do well. Historically they have been extremely good. Three-year cash flow has grown quite well. Margins are good. ROE is extremely high. Sales growth is at the end of July was a 45%.

COMMENT
COMMENT
June 24, 2013

Have been doing a lot of acquisitions over the last several years. If they could not make an acquisition they would have to use their cash flow to raise the dividend. As the stock market goes down, business valuations also go down making it easier for them to make acquisitions.

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Have been doing a lot of acquisitions over the last several years. If they could not make an acquisition they would have to use their cash flow to raise the dividend. As the stock market goes down, business valuations also go down making it easier for them to make acquisitions.

TOP PICK
TOP PICK
April 3, 2013

Just reported Q4 earnings a couple of weeks ago. While the market was down 250 points, this stock hit a new all-time high. Thinks the stock goes way higher this year and that the analysts underestimate how big the earnings jump is going to be for 2013. Dividend yield of 3.22%.

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Just reported Q4 earnings a couple of weeks ago. While the market was down 250 points, this stock hit a new all-time high. Thinks the stock goes way higher this year and that the analysts underestimate how big the earnings jump is going to be for 2013. Dividend yield of 3.22%.

DON'T BUY
DON'T BUY
April 1, 2013

They go around buying up software companies. He likes the business model. The stock is probably fully valued and there is a risk of a correction of 15-20% so he would be cautious.

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They go around buying up software companies. He likes the business model. The stock is probably fully valued and there is a risk of a correction of 15-20% so he would be cautious.

PAST TOP PICK
PAST TOP PICK
February 6, 2013

(A Top Pick March 5/12. Down 39.35%.) This is a “growth through acquisition” model so they do a lot of acquisitions. He Buys because he feels it has a rapidly expanding net present value of its future cash flows.

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(A Top Pick March 5/12. Down 39.35%.) This is a “growth through acquisition” model so they do a lot of acquisitions. He Buys because he feels it has a rapidly expanding net present value of its future cash flows.

DON'T BUY
DON'T BUY
February 4, 2013

Prefers companies that have organic growth with good margins and a business model that makes them competitive in a way that they can gain market share. Great management who knows how to put businesses together but are basically driven by acquisitions. Have to do an acquisition almost every 2 weeks.

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Prefers companies that have organic growth with good margins and a business model that makes them competitive in a way that they can gain market share. Great management who knows how to put businesses together but are basically driven by acquisitions. Have to do an acquisition almost every 2 weeks.

PAST TOP PICK
PAST TOP PICK
January 8, 2013

(A Top Pick Jan 13/12. Up 49.75%.) Has been a ton of acquisition announcements over the last 3 months so he expects to see some positive revisions up from analysts as we go into 2013. Still a Hold.

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(A Top Pick Jan 13/12. Up 49.75%.) Has been a ton of acquisition announcements over the last 3 months so he expects to see some positive revisions up from analysts as we go into 2013. Still a Hold.

BUY
BUY
December 28, 2012

Not too late to get into this one as long as the fundamental change factors continue to be positive. Not super expensive. Trades at almost 17X next year’s earnings but less so on cash flow, which is something like 10 or 12 times.

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Not too late to get into this one as long as the fundamental change factors continue to be positive. Not super expensive. Trades at almost 17X next year’s earnings but less so on cash flow, which is something like 10 or 12 times.

HOLD
HOLD
December 7, 2012

Chart shows a strong uptrend. What’s not to like? He likes to buy a stock in an uptrend near the trend line. If it breaks the trend line, you bailout but not until then.

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Chart shows a strong uptrend. What’s not to like? He likes to buy a stock in an uptrend near the trend line. If it breaks the trend line, you bailout but not until then.

PAST TOP PICK
PAST TOP PICK
November 23, 2012

(A Top Pick Dec 12/11. Up 58.3%.) A software company that buys other software companies. Best at buying best-of-breed software companies for very low multiples. Superb management team. Almost a 4% dividend.

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(A Top Pick Dec 12/11. Up 58.3%.) A software company that buys other software companies. Best at buying best-of-breed software companies for very low multiples. Superb management team. Almost a 4% dividend.

BUY
BUY
November 15, 2012

(Market Call Minute) Predictable cash flow. Mature software gives them licensing revenue. Performing well and tightly held.

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(Market Call Minute) Predictable cash flow. Mature software gives them licensing revenue. Performing well and tightly held.

PAST TOP PICK
PAST TOP PICK
October 3, 2012

(Top Pick Oct 17/11, Up 54.69%) Return on capital makes it a profit machine. A lot of acquisitions this year and expects spectacular growth next year.

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(Top Pick Oct 17/11, Up 54.69%) Return on capital makes it a profit machine. A lot of acquisitions this year and expects spectacular growth next year.

BUY WEAKNESS
BUY WEAKNESS
June 4, 2012
A large software company that basically grows by acquisition. Reported earnings around May 1 was a negative 8% earnings surprise. This was unusual for this company. This stock ranks in the top 15% of his database. This is one that you could buy and put away for a year. Would look to buy at around $85. $100 would be a reasonable target in 12 months.
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A large software company that basically grows by acquisition. Reported earnings around May 1 was a negative 8% earnings surprise. This was unusual for this company. This stock ranks in the top 15% of his database. This is one that you could buy and put away for a year. Would look to buy at around $85. $100 would be a reasonable target in 12 months.
COMMENT
COMMENT
Good growth. Yielding 4.4%.
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