Here’s Why Constellation Software (TSE:CSU) Has Caught The Eye Of Investors

It’s common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merits of good company fundamentals. Loss-making companies are always racing against time to achieve financial sustainability, so investors in these companies may be taking on more risk than they should.

If this kind of company isn’t your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Constellation Software (TSE:CSU). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Constellation Software with the means to add long-term value to shareholders.

Check out our latest analysis for Constellation Software

How Quickly Is Constellation Software Increasing Earnings Per Share?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. So it makes a sense that experienced investors pay close attention to company EPS when undertaking investment research. We can see that in the last three years Constellation Software grew its EPS by 12% per year. That growth rate is fairly good, assuming the company can keep it up.

It’s often helpful to take a look at earnings before interest and tax (EBIT) margins, as well as revenue growth, to get another take on the quality of the company’s growth. While we note Constellation Software achieved similar EBIT margins to last year, revenue grew by a solid 29% to US$7.9b. That’s encouraging news for the company!

You can take a look at the company’s revenue and earnings growth trend, in the chart below. For finer details, click on the image.

In investing, as in life, the future matters more than the past. So why not check out this free constellation software’s interactive visualization forecast profits?

Are Constellation Software Insiders Aligned With All Shareholders?

Since Constellation Software has a market capitalization of CA$70b, we wouldn’t expect insiders to hold a large percentage of shares. But we are reassured by the fact they have invested in the company. We note that their impressive stake in the company is worth US$4.8b. This suggests that leadership will be very mindful of shareholders’ interests when making decisions!

Is Constellation Software Worth Keeping An Eye On?

One positive for Constellation Software is that it is growing EPS. That’s nice to see. For those who are looking for a little more than this, the high level of insider ownership enhances our enthusiasm for this growth. The combination is definitely favored by investors so consider keeping the company on a watchlist. We didn’t want to rain on the parade too much, but we did find it too 2 warning signs for Constellation Software that you need to be mindful of.

Story continues

The beauty of investing is that you can invest in almost any company you want. But if you prefer to focus on stocks that have demonstrated insider buying, here is a list of companies with insider buying in the last three months.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.