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Constellation Software Inc T.CSU

Alternate Symbol(s):  T.CSU.DB | CNSWF

Constellation Software Inc. is a provider of software and services to a select group of public and private sector markets. The Company acquires, manages, and builds vertical market software (VMS) businesses, which provide specialized, mission-critical software solutions that address the specific needs of its customers. It is engaged principally in the development, installation, and customization of software as well as in the provisioning of related professional services and support for customers globally. It sells on-premises software licenses on both a perpetual and specified-term basis. It has six operating groups, which service customers in over 100 different markets around the world. The six operating groups include Volaris, Harris, Topicus, Vela, Jonas, and Perseus Group. The Company’s products include Empower LOS, Optimal Blue, NOVA LOS, Reverse Vision, and Axacore. It operates in three principal geographical areas, Canada, the United States, and the United Kingdom/Europe.


TSX:CSU - Post by User

Bullboard Posts
Comment by EventHorizonon Feb 27, 2020 8:06pm
438 Views
Post# 30744230

RE:RE:CSU business model - buying growing or declining businesses?

RE:RE:CSU business model - buying growing or declining businesses?Thank you for the response. Reading the president's letters, it still seems that there is not a whole lot of organic growth in the growing businesses that the company is aspiring to acquire.

The 2017 letter for example lists the average 10-year organic growth as 7.6% while the price increases consisted of 82% of this values (average of 6.1% per year and largely declining from 9% to 5%). That is far higher price rise than inflation and will eventually run into a ceiling.

I understand that the software cycle is multiple years and new initiatives will take several years to just break even. However, CSU and its underlying businesses have been operating for many years and are not new startups... meaning, that they should have a stabilized pipeline of growing revenue (some cash-cow existing software, some almost finished products, and also just some brand new concepts in the works).

Does anyone know what is the CSU leadership/management style when it comes to innovation investment in their subsidiaries? In some of the other investor letters the CEO was mentioning working on a better tracking system for the return on investment on internal projects and how they can be risky and not generate as high returns as what the development team originally anticipated in most cases. In the long run, will CSU be a consolidator of cigar butt declininc legacy businesses or are its businesses encouraged to heavily invested in long-term vision, working on new revenue streams which might provide growth in several years from now?

CSU stock has fairly high multiple. Knowing whether there is a lot of potential upside in its businesses as it is right now without any new acquisitions would help me better understand its valuation.
Bullboard Posts