Topicus Stock Jumps 16% on Killer Full-Year Earnings

Topicus (TSXV:TOI) reported strong earnings after revenues surged higher, and with a volatile market this is exactly what you want to see.

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Shares of Topicus (TSXV:TOI) climbed 16% to end out the week as the company reported an amazing quarter and full-year results. The software company continues to run a strong streak and climb towards all-time highs.

What happened

Topicus stock continued to impress investors this week as it reported both fourth quarter and full-year 2023 earnings. The tech stock reported revenue was up 17% year over year, reaching €309.7 million in the fourth quarter. Net income also increased to €42.5 million, reaching €0.31 on a diluted per share basis.

Meanwhile, Topicus stock reported a strong year as well, with revenue up 23% compared to 2022 levels. This allowed revenue to reach €1,125 million, compared to €916.7 million in 2022. Net income also came in far higher, reaching €115.4 million or €0.88 on a diluted per share basis. What’s more, free cash flow surged, up 126% year over year to €123.4 million.

While the stock hasn’t come out with any forward-looking guidance for the software acquisition company, this might change once parent company Constellation Software (TSX:CSU) comes out with earnings next week.

Continued success

Topicus stock hasn’t been on the market very long, but has proven once again with this earnings report that it is set up for success. That success is meant to replicate the same success seen by Constellation stock over the last two decades.

Constellation came on the scene and acquired essential software companies across North America. These include everything from subway service to library access, and everything in between. The company acquires these for usually under $5 million, while revenue increases again and again as they put companies under the Constellation brand.

Now, that success is aiming to be replicated in Europe. And as we’ve seen, it has already proven to be quite successful. Yet the company still remains in value status, if you were to compare it with the growth we’ve seen from Constellation stock. That company started trading at $35 per share, and is now over $3,000 per share. And if Topicus stock is similar, the current share price of $120 still looks like a steal.

Stable growth ahead

The bottom line here is that Topicus stock isn’t starting from scratch. Instead, the company is using the play book that Constellation stock has made up over the last two decades. What’s more, some European companies acquired by Constellation stock have since been put under the Topicus stock name.

With Constellation management behind the scenes for now, Topicus stock offers an opportunity similar to picking up Constellation at the ground floor. Shares are already up 29% in the last year alone. And despite being an acquisition company, the tech stock only has a debt-to-equity ratio of 48%.

The company also looks likely to eventually produce a dividend, just as Constellation stock has done. So while we continue to seek out strong companies offering value on the TSX today, certainly consider Topicus stock. It has managed to provide strength even during a volatile period of time. And when that volatility is gone, the company is likely to surge even higher.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has positions in The Motley Fool has positions in and recommends The Motley Fool recommends Constellation Software. The Motley Fool has a disclosure policy.

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