Constellation Software & Co: Double alert, triple opportunity?

Few listed companies have had such a breathtaking journey as Constellation Software, or its two recent spin-offs, Topicus and Lumine.

Constellation's share price has skyrocketed 250-fold in nineteen years, and six-fold in the last ten years. Meanwhile,  Topicus' share price tripled between its listing in early 2021 and the summer of 2025. Lumine, which was listed on the stock exchange in the spring of 2023, has followed a similar path.

As astute buyers, Constellation's two subsidiaries follow the same methods and recipes for success as their parent company, which maintains a majority stake in each of them.

For these stockmarket stars, an initial warning was issued earlier this year regarding the risk posed by the rapid expansion of artificial intelligence, which could disrupt publishers of so-called "vertical" software—i.e., niche software focused on very specific business applications.

A second warning—this one completely unexpected—came last week with the announcement that health reasons led to Constellation's brilliant founder, Mark Leonard, stepping down. The news resulted in a further fall in the share prices of these three stocks.

Following these setbacks, based on their enterprise values, Constellation, Topicus, and Lumine are trading at 17x, 16x, and 25x their expected operating profit before investments—or EBITDA—over the next 12 months, i.e., at or close to their lowest valuation multiples in five years.

Based on their market capitalizations and annualized free cash flows relative to their first-half results, Constellation is trading at 23x its cash profit, Topicus at 17x, while Lumine, at 30x its cash profit, remains the favorite amongst investors.

Some will see these multiples as attractive entry points for these three companies with impressive growth trajectories. At the helm of Constellation, Mark Leonard has been replaced by his number two and VMS industry veteran Mark Miller. Last week, Miller took advantage of the downturn to acquire 275 shares on the market.

Topicus, which has been very active in deployment over the past 18 months, remains focused primarily on Europe, where the VMS sector remains highly fragmented. Lumine, for its part, focuses on software publishers specializing in the media and communications industry.