Toronto, Feb 3, 2026, 10:28 (EST)
- Constellation Software has dropped roughly 48% over the last 52 weeks, according to market data.
- Ruane Cunniff LP noted the stock is currently valued at a high-teens forward P/E, despite pressure from CEO risk and concerns around AI.
- A Yahoo Finance column highlighted Constellation, Topicus.com, and goeasy as long-term “compounders,” even though they’ve seen sharp pullbacks.
Constellation Software’s shares have dropped about 48% in the last year, marking a striking turnaround for a firm once seen as a reliable growth engine fueled by niche software acquisitions and consistent cash flow.
Timing is key. New doubts about whether generative AI will erode pricing power in software and information services have made investors less willing to pay a premium for steady earnings, even in companies with dedicated customer bases.
European software and information firms like RELX and Wolters Kluwer tumbled over 10% Tuesday following the launch of a new AI legal tool by Anthropic. Maximilien Pascaud of Baader Bank warned that “deflationary pressure on software-sector multiples could persist” until the path to AI-driven revenue becomes clearer. Reuters
Constellation is at the center of this debate. The company acquires “vertical market” software—tools tailored to specific industries—and funnels cash back into further acquisitions, a cycle that’s proven effective for decades.
Ruane Cunniff noted late Monday that Constellation’s shares are currently priced at a “high-teens multiple” of its forward earnings per share estimate — the expected profit per share for next year — and described the valuation as compelling. Seekingalpha
The CEO change is official. Constellation said founder Mark Leonard stepped down due to health issues but will stay on as a director. Mark Miller, previously COO, has taken the helm as president. “The Board and I have complete confidence in Mark Miller,” Leonard said in a company statement. Csisoftware
In its Jan. 30 shareholder letter, Ruane Cunniff noted that AI is rattling markets because it could simplify software development or even replace some software altogether. Still, the firm believes Constellation’s businesses have time to adjust. It highlighted that Miller has urged divisions to “disrupt themselves” through AI, aiming to generate new revenue streams rather than just trimming expenses. Sequoiafund
Another investing column republished on Yahoo Finance this week highlighted Constellation as a solid long-term compounder. It noted third-quarter revenue climbed 16% to $2.9 billion, while cash from operations hit $685 million. Free cash flow available to shareholders came in at $529 million. Yahoo
The column also spotlighted Topicus, a Constellation-controlled software firm centered on Europe, alongside goeasy, which lends to near-prime and non-prime borrowers. It flagged Topicus’s net loss, mainly due to accounting for its stake in Asseco Poland, and pointed out that goeasy’s performance can fluctuate with job cuts, late payments, and regulatory shifts.
Things could easily take a wrong turn. If AI cuts switching costs—the hassle of changing software—Constellation’s grip on pricing might slip, making the acquisition numbers less impressive to investors. For goeasy, a rougher credit cycle risks more delinquencies and bigger loan-loss provisions.
Last week, a The Globe and Mail investing column argued Constellation could weather the AI threat hitting software stocks — a stance now under pressure as the stock slides. Theglobeandmail
Investors are looking to see if Constellation can keep its deal flow steady, maintain strong cash generation, and prove that AI isn’t just hype — whether it’s driving new products or helping secure customer loyalty.
