logo
  Join        Login             Stock Quote

Constellation Software Estimates Cut By CIBC After Q1, 'Sector Performer' Maintained

 May 04, 2012 01:35 PM


(By Balaseshan) CIBC World Markets Inc. lowered its earnings estimates for Constellation Software Inc. (TSE:CSU) after the company's first quarter results. The brokerage maintained its "Sector Performer" rating and $99 price target on shares of CSU.

CSU reported $195 million in revenue and adjusted EPS of $1.50 in Q1, below consensus ($201 million/$1.81). Revenue was impacted by a lower organic growth rate (3%) and slower acquisition activity in 2011. Increased marketing activities, which appear to be seasonal, impacted margins (20%).

Public sector organic headwinds impacted revenue in Q1. CIBC expects this to continue through 2012, given weakness in the public sector, particularly in the US and UK. However, the firm expects improving growth in the private sector vertical to somewhat offset.

[Related -8 Stocks to Beat Warren Buffett's Portfolio Return Easily]

The brokerage expects acquisition activity to improve over last year's levels. Year-to-date, Constellation has completed nine acquisitions (deal value up $20 million) versus seven ($31 million) in the prior period. With the strategic review a distraction in the second half of 2011, the firm expects acquisitions to be up year-over-year in the second half of 2012.

Despite a weak Q1, CIBC's view on CSU remains unchanged. About 55% recurring maintenance revenue provides some consistency and strong cash flow, $174 million 2012 (up 27% year-over-year), is used to fund acquisitions and the dividend.

The brokerage reduced its 2012 EPS estimate for Constellation Software to $7.36 from $7.74, while maintaining its 2013 estimate of $8.57.

[Related -How the Chinese Slowdown Will Impact Your Investments]

Constellation Software acquires, manages and builds vertical market software (VMS) businesses. It is engaged in the development, installation and customization of software, and in the provision of related professional services and support. The company operates its business in two segments: the Public Sector segment and the Private Sector segment.

CSU is trading up 0.63% at C$89.36 on Friday.

iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageHow the Chinese Slowdown Will Impact Your Investments

Most countries would find a quarterly growth rate of 7.3% a cause for a read on...

article imageHow To Profit From Foreign Investment In Real Estate

Though investors don't always capitalize on it, history has a way of repeating itself. In fact, when I saw read on...

article imageAnother Round Of Upbeat US Macro Reports

The US economy grew faster than expected in this year’s third quarter, according to this morning’s read on...

article imageDistinguishing The Fed's Securities Purchases From Monetary Expansion

There has been a bit of confusion about what today's FOMC announcement means with respect to Quantitative read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center

Related Articles:

Gold: The Ultimate Store of Value?
More Articles on: Computer and Technology



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.