- Published on
CSU Grew Revenue But Free Cashflow Stagnates
- Authors
- Name
- Solo FIRE
Constellation software CSU reported 23% revenue increase for Q1 2024, with 3% organic growth in their software businesses, however free cashflow is flat YoY at $446 million. Running a DCF results in an estimation of CA$3816 per share fair value, here are the assumptions:
- Latest TTM free cashflow (FCFA2S) of CA$1578.24 million
- Future price/FCFA2S of 30 (5 YR avg is 35)
- FCFA2S Growth rate of 15% (5 YR avg is 15.72%)
- No share dilutions
- Discount rate of 10%
I personally think this estimation is not very conservative and the share is on the expensive side.
Regarding the stagnant free cash flow, I noticed it is mainly coming from the increased interest expenses (this makes sense due to higher rates) and the IGRA/TSS membership liability. I'm personally ok with these as they are not related to operations of the company.
The free cash flow would have increased by 13% if these items are excluded, so I think the company is doing ok.
Click here original post and comments on Blossom
DISCLAIMER: Solofire is not a registered financial advisor. This post contains author's personal opinion only and it should NOT be considered financial advice.