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 |
|---|
| Revenue | 634 | 773 | 891 | 1,211 | 1,669 |
|---|
| Revenue growth, % | | 22.0% | 15.2% | 35.9% | 37.9% |
|---|
| Gross margin, % | 86.9% | 85.5% | 86.2% | 85.5% | 86.1% |
|---|
| SG&A, % | | | | | |
|---|
| EBITDA | 116 | 168 | 186 | 244 | 365 |
|---|
| EBITDA growth, % | | 44.5% | 10.6% | 31.1% | 49.5% |
|---|
| EBITDA margin, % | 18.4% | 21.7% | 20.9% | 20.1% | 21.8% |
|---|
| Net Income | 30 | 157 | 93 | 93 | 103 |
|---|
| Net Income margin, % | 4.73% | 20.3% | 10.4% | 7.69% | 6.18% |
|---|
| |
| CAPEX | 7 | 7 | 6 | 11 | 14 |
|---|
| CAPEX/Revenue, % | 1.12% | 0.950% | 0.684% | 0.917% | 0.831% |
|---|
| Debt | 46 | 0 | 44 | 477 | 295 |
|---|
| Cash | 31 | 33 | 41 | 78 | 71 |
|---|
| Net Debt/EBITDA | 0.1x | -0.2x | 0.0x | 1.6x | 0.6x |
|---|
| |
| 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 ($OTC) | -0.1x | 0.0x | 0.1x | 0.2x | 1.8x |
| CGI Group Inc ($GIB.A) | 1.4x | 1.3x | 6.0x | 2.4x | 1.3x |
| SMART Technologies Inc ($SMA) | 5.1x | 1.4x | 2.1x | | 1.2x |
| Sandvine Corp ($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 | -0.2x | 0.0x | 1.6x | 0.6x |
