CSU changes
Pick any two versions below to diff them.
- Price
- CA$3278.00 → CA$3236.06(−1.3%)
- Discount
- −10% to 19% → −9% to 20%(+1.0 pts)
- Next earnings is estimate
- Yes → No
- Thesis
- Investors worry that cheap AI tools will let rivals copy Constellation's niche, industry-specific software. This fear grew when organic growth slowed to 3% in the second quarter of 2026, or 1% after currency effects. Organic growth of maintenance and recurring revenue fell to 2% after currency effects, its lowest rate in at least two years. Founder Mark Leonard also resigned as President for health reasons in 2025 and left the board in May 2026. Constellation's software runs core, regulated tasks such as utility billing or court case management. Customers rarely remove this kind of system, since a failure would disrupt daily operations. This makes a quick AI clone unlikely to displace it. But the new President, Mark Miller, has not yet run the company's acquisition process through a full economic cycle without Leonard. S&P raised its outlook on Constellation in August 2026 because leverage fell, so the balance sheet is not the market's main worry. The first test is whether organic growth of recurring revenue returns to about 5%, the rate Miller calls normal. Management said that $17 million of one-time revenue at Altera in the second quarter of 2025 caused most of the slowdown. The second test is whether Miller keeps finding acquisitions at the same hurdle rates while competition for targets stays strong. Q3 2026 results, expected in earlydue after the market closes on November 6, 2026, give the next organic-growth reading. But proving the capital-allocation approach works without Leonard takes several years of results. So this discount likely takes several years to close fully.
- Checkpoints
- Nov 6, 2026 (estimate): Q3 2026 results: organic growth and acquisition spending. Pending. Watch: Organic growth of maintenance and recurring revenue back near 5% after currency effects (2% in Q2), as Mark Miller expects, passes; growth at or below 2% after currency effects or a lower pace of acquisitions fails. Mar 2027 (estimate): Full-year 2026 results and first annual letter under Miller. Pending. Watch: Organic growth in the second half of 2026 above the 3% of Q2 and a clear capital-allocation plan from Mark Miller pass; organic growth at or below 3% or weaker returns on acquisitions fail.
- Recent events
- 2026-10-16: Constellation said that it will release Q3 2026 results after the Toronto Stock Exchange closes on November 6, 2026. It will hold a conference call on November 9, 2026, at 8:00 a.m. ET. 2026-08-28: S&P affirmed its BBB rating on Constellation Software and changed the outlook to positive from stable. S&P said net leverage fell to 1.1 times EBITDA for the 12 months to June 2026. 2026-08-12: Constellation held a quarterly conference call. Mark Miller said the company will not give an AI target, an AI revenue line or an AI timeline. He said AI has not yet given a real increase in organic growth, and that hurdle rates for acquisitions do not change. 2026-08-11: Constellation reported Q2 2026 revenue of $3,335 million, up 17% from last year. Organic growth was 3%, or 1% after currency effects. Management said most of the slowdown came from Altera, which had $17 million of one-time revenue in Q2 2025. Free cash flow available to shareholders was $345 million. 2026-05-15: Mark Leonard left the board at the annual meeting. He did not stand for re-election, as the company said on March 27, 2026. He stays as an advisor for the company's long-term minority stakes in other companies. 2025-09-25: Mark Leonard resigned as President for health reasons and stayed on the board. The board appointed Mark Miller as President. Miller is the Chief Operating Officer and kept that role. He has been on the leadership team for over 30 years.