Trending stocks
$VRX  
$CSU  
$PTS  
$AYA  
$TC  

The numbers tell that Constellation Software Inc/Canada's growth is outstanding

04.03.2015 • About Constellation Software Inc/Canada ($CSU) • By InTwits

Constellation Software Inc/Canada is a fast-growing stock in Technology industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.

Growth story


Constellation Software Inc/Canada showed growth in the last financial year. The company's revenue surged on 37.9% in FY2014. EBITDA also increased considerably: 49.5% for the same period.

If we look for the longer period the company showed fast revenue growth of 29.2% from 2011 to 2014 annually. EBITDA surged on 29.4% from 2011 to 2014 annually.

Constellation Software Inc/Canada ($CSU) financials for the last 5 years

mln. $ 2010 2011 2012 2013 2014
Revenue6347738911,2111,669
Revenue growth, %22.0%15.2%35.9%37.9%
Gross margin, %86.9%85.5%86.2%85.5%86.1%
SG&A, %
EBITDA116168186244365
EBITDA growth, %44.5%10.6%31.1%49.5%
EBITDA margin, %18.4%21.7%20.9%20.1%21.8%
Net Income301579393103
Net Income margin, % 4.73%20.3%10.4%7.69%6.18%
 
CAPEX7761114
CAPEX/Revenue, %1.12%0.950%0.684%0.917%0.831%
Debt46044477295
Cash3133417871
Net Debt/EBITDA0.1x-0.2x0.0x1.6x0.6x
 
ROIC, %22.8%45.8%45.9%22.4%24.7%
ROE, %23.9%78.7%36.0%35.5%39.2%

Profitability and return on investment


EBITDA growth was partly attributed to margin expansion. Constellation Software Inc/Canada's EBITDA margin increased on 1.70 pp from 20.1% to 21.8% in 2014. In the last 3 years the company showed almost no change in EBITDA margin of 0.100 pp from 21.7% in 2011 to 21.8% in 2014.

We call Constellation Software Inc/Canada an attractive growth stock as together with the growth it delivers high ROIC at 24.7%. Three years ago it was considerably higher at 45.8%. It's average level of ROIC for the last three years was 31.0%.

Net Income margin dropped on 1.50 pp from 7.70% to 6.20% in 2014. In the longer period Net Income margin dropped on 14.1 pp from 20.3% in 2011 to 6.20% in 2014.

Constellation Software Inc/Canada operates at ROE of 39.2%. It's average level of ROE for the last three years was 36.9%.

Capital expenditures (CAPEX)


In FY2014 Constellation Software Inc/Canada had CAPEX/Revenue of 0.831%. CAPEX/Revenue dropped on 0.120 pp from 0.950% in 2011 to 0.831% in 2014. For the last three years the average CAPEX/Revenue was 0.811%.

Leverage (Debt)


Having such a fast growth profile Constellation Software Inc/Canada keeps low debt level at 0.6x Net Debt/EBITDA. In the last 3 years the company showed fast leverage growth of 0.81x from -0.20x in 2011 to 0.61x in 2014.

Peers in Technology


Below you can find Constellation Software Inc/Canada benchmarking vs. other companies in Technology industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Redknee Solutions Inc ($RKN)25.9%-4.5%151.6%81.4%
Sylogist Ltd ($SYZ)1.5%-5.8%25.7%50.5%
Cortex Business Solutions Inc ($CBX)-29.2%61.2%24.8%45.6%
Bluedrop Performance Learning Inc ($BPL)-36.5%1,966.4%13.9%33.5%
Enghouse Systems Ltd ($ESL)30.1%11.3%31.9%22.3%
 
Median (19 companies)13.3%10.1%12.9%11.5%
Constellation Software Inc/Canada ($CSU)22.0%15.2%35.9%37.9%


Top companies by Gross margin, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Absolute Software Corp ($ABT)76.7%71.6%73.6%76.3%78.4%
Sandvine Corp ($SVC)68.8%74.3%67.5%74.1%76.8%
Open Text Corp ($OTC)74.1%73.6%72.4%71.2%72.8%
Halogen Software Inc ($HGN)68.4%72.0%74.8%71.8%
Kinaxis Inc ($KXS)74.5%71.8%70.4%70.4%
 
Median (18 companies)61.0%56.9%66.4%51.2%47.4%
Constellation Software Inc/Canada ($CSU)86.9%85.5%86.2%85.5%86.1%


Top companies by EBITDA margin, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Wi-LAN Inc ($WIN)3.6%26.5%40.9%12.2%56.2%
Computer Modelling Group Ltd ($CMG)50.3%51.5%53.8%52.2%51.5%
Open Text Corp ($OTC)24.5%27.1%26.5%29.1%30.0%
Sandvine Corp ($SVC)13.1%5.1%0.9%24.0%28.2%
Enghouse Systems Ltd ($ESL)22.6%24.8%25.4%23.6%24.7%
 
Median (19 companies)12.3%19.1%12.8%11.6%17.0%
Constellation Software Inc/Canada ($CSU)18.4%21.7%20.9%20.1%21.8%


Top companies by CAPEX/Revenue, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Halogen Software Inc ($HGN)8.5%4.9%9.0%8.4%
Kinaxis Inc ($KXS)2.2%2.9%2.3%5.0%
BlackBerry Ltd ($BB)6.8%5.2%4.9%3.8%4.2%
Sandvine Corp ($SVC)8.0%7.3%4.9%3.2%3.2%
Open Text Corp ($OTC)2.1%3.5%2.1%1.7%2.6%
 
Median (19 companies)2.9%2.0%2.5%1.7%1.6%
Constellation Software Inc/Canada ($CSU)1.1%1.0%0.7%0.9%0.8%


Top companies by ROIC, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Kinaxis Inc ($KXS)61.8%63.6%
Computer Modelling Group Ltd ($CMG)70.8%75.5%74.2%68.6%62.9%
SMART Technologies Inc ($SMA)66.2%43.2%21.4%-18.9%28.1%
Sandvine Corp ($SVC)4.9%-1.7%-4.9%16.9%20.2%
CGI Group Inc ($GIB.A)15.2%14.7%5.7%10.9%17.1%
 
Median (19 companies)11.1%9.6%9.1%6.1%7.4%
Constellation Software Inc/Canada ($CSU)22.8%45.8%45.9%22.4%24.7%


Top companies by Net Debt / EBITDA

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Open Text Corp ($OTC)-0.1x0.0x0.1x0.2x1.8x
CGI Group Inc ($GIB.A)1.4x1.3x6.0x2.4x1.3x
SMART Technologies Inc ($SMA)5.1x1.4x2.1x1.2x
Sandvine Corp ($SVC)-7.4x-0.6x-4.8x-0.2x-0.4x
Descartes Systems Group Inc/The ($DSG)-5.9x-3.2x-2.2x-1.1x-0.6x
 
Median (13 companies)-1.3x-0.9x-1.7x-1.4x-1.3x
Constellation Software Inc/Canada ($CSU)0.1x-0.2x0.0x1.6x0.6x