Sasha Jovanovic
4 min read
Constellation Software stock closed Friday at CA$3,526.52, capping a strong 30 day run of about 17% before the Q3 2026 numbers hit the tape. The headline this time is profit pressure. Basic earnings per share came in at US$10.00 for the quarter, well below Q2, even as revenue reached US$3.512b.
Short term traders will focus on that squeeze in earnings power. Long term holders are more likely to weigh it against a trailing twelve month net margin of 7.3% and an earnings multiple sitting around 54.9x P/E.
Love the Constellation Software revenue footprint but concerned about earnings getting squeezed at a 54.9x P/E? Compare it with a list of solid balance sheet and fundamentals stocks (5 results) to see businesses that pair resilient balance sheets with firmer profit power.
Q3 2026 Earnings Summary
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Revenue (Q3 2026 vs Q3 2025): US$3.512b vs. US$2.948b (up about 19%)
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Net Income (Excl. Extra Items, Q3 2026 vs Q3 2025): US$212m vs. US$210m (broadly flat, slight increase of about 1%)
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Basic EPS (Q3 2026 vs Q3 2025): US$10.00 vs. US$9.91 (effectively unchanged, up about 1%)
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Trailing 12 Month Net Profit Margin (Q3 2026 vs prior year): 7.3% vs. 6.2% (margin improved by about 1.1 percentage points over the year)
Earnings tell part of the story for Constellation Software, but investors who care about what they pay for each share often focus on the cash flowing through the business instead of one quarter’s profit line.
On current numbers, if you look at Constellation Software’s cash flows on their own, the stock could be a dramatic 44% undervalued.
Constellation Software: Testing The Compounding Ambition
The bullish script says Constellation Software can keep compounding free cash flow and operating margins as more acquired units and PEMS positions mature. That ambition is clear in the original thesis.
“Bullish analysts expect Constellation Software to keep compounding free cash flow and operating margins over time by applying its decentralized, vertical market model and disciplined acquisition approach across a widening range of software and adjacent businesses.”
Q3 gives partial support. Revenue rose 19% year on year and net income excluding extra items inched ahead, so earnings are still tracking that compounding story, but at a slower gear than the top line. The US$484m deployed into acquisitions in Q3 and US$526m committed after quarter end show the M&A engine is doing its part. The trailing 7.3% net margin versus 6.2% a year earlier also points to cohorts moving through the margin curve as the narrative expects.
