Constellation Software Inc.

Constellation Software Inc. Q3 2017 EPS $5.45 vs. estimates of $5.89

Financial Highlights

-Revenue grew 17% to $637 million.

-Net income decreased 20% to $54 million.

-14 acquisitions this quarter worth $52 million.

My Comments

-Constellation Software is one of the hidden gems on the TSX, a serial acquirer which has outperformed the TSX, up 546.42% vs. 29.21% over the past 5 years.

-With a market cap of $16 Billion as of this report, further acquisitions may become difficult to move the needle materially.

-Organic growth is a key metric that should be watched, and given more importance to, as the company should not have to rely on acquisitions for growth.

Key Metrics

-Dividend growth 5-year average: 5.6%

-EPS growth 3-year average: 30.52%

-Current P/E: 56.2

-5-year average P/E: 45.6

Recommendation: Hold

-Following the earnings miss, some selling is expected, which if persists should be viewed as a buying opportunity for long-term investors.

-As Constellation Software grows, more attention will be brought to it and their fantastic management, which should attract more retail investors.

Disclosure

I, Jared Flomen, do not own shares of Constellation Software.

Please consult a financial advisor before making investment decisions. This report represents my views, not actionable advice.