Author argues Constellation Software (CSU) is statistically cheap on forward free cash flow multiples after a SaaS selloff and is buying more shares.
CSU.TO — LONG After a two-day ~10% drawdown driven by AI fears, the author argues Constellation Software trades at roughly 15x forward 2026 P/FCFA2S versus its historical 25-35x range, about two standard deviations below normal. With forward FCF yield near 6.5% and 15-20% top-line growth, the author estimates the full investment cost could be recouped from cash flow in about eight years. The author holds 96 shares and plans to keep buying, framing the selloff as a statistical outlier rather than a fundamental deterioration.
Based on forward 2026 estimates, each share is estimated to generate about $200 CAD. At the current price of ~$3,000 CAD per share, this is at a forward P/FCFA2S of about 15x, for a company that has historically traded between 25-35x forward P/FCFA2S.