The Descartes Systems Group (DSG) AI Stock Analysis

• Market Cap: $13.49B
• Dividend Yield: N/A
• Average Volume (3M): 138.30K
• Price to Earnings (P/E): 73.3
• Beta (1Y): 0.78
• Revenue Growth: 15.98%
• EPS Growth: 21.64%
• Country: CA
• Employees: 642
• Sector: Technology
• Sector Strength: 48
• Industry: Software
• EPS (TTM): 2.15
• Shares Outstanding: 85,539,440
• 10 Day Avg. Volume: 152,143
• 30 Day Avg. Volume: 138,304
• PEG Ratio: 3.39
• Price to Book (P/B): N/A
• Price to Sales (P/S): 15.13
• Price to Cash Flow (P/CF): 39.70
• P/FCF Ratio: 40.50
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$201.01
• Price Target Upside: 27.43% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 3

The Descartes Systems Group demonstrates strong financial health with excellent growth and profitability metrics, bolstered by successful acquisitions and a robust cash position. However, technical indicators reflect bearish momentum, and the high P/E ratio suggests overvaluation. Despite these concerns, strategic corporate events and a positive earnings call outlook contribute to a favorable overall assessment.

Positive Factors

Earnings Growth

The company's consistently strong earnings growth, with an expected north of 15% EBITDA growth, is a primary reason to own the stock.

M&A Strategy

DSGX operates an effective total growth strategy and has the best and deepest M&A pipeline in company history, which combines to yield synergistic deal activity.

Negative Factors

Valuation Concerns

There is a struggle with the stock's significant valuation premium relative to other software consolidators.

The Descartes Systems Group Business Overview & Revenue Model

Company Description

The Descartes Systems Group (DSG) is a global leader in providing on-demand, software-as-a-service solutions focused on logistics and supply chain management. The company operates in sectors such as transportation, warehousing, and compliance, offering a suite of products that enhance efficiency, productivity, and security in the logistics operations of businesses worldwide. Descartes' core offerings include solutions for route planning, transportation management, customs and regulatory compliance, and global trade content.

How the Company Makes Money

Descartes Systems Group generates revenue primarily through its subscription-based SaaS model, where customers pay recurring fees to access its logistics and supply chain management solutions. The company's key revenue streams include subscription fees for its software, professional services for implementation and support, and hardware sales related to its logistics solutions. Additionally, Descartes benefits from strategic partnerships and acquisitions that expand its service offerings and customer base, further enhancing its revenue potential. The company leverages its extensive global network and industry expertise to maintain competitive pricing and deliver value-added services, contributing to its overall financial performance.

The Descartes Systems Group Financial Statement Overview

Summary

The Descartes Systems Group demonstrates strong financial performance with robust revenue growth and high profitability margins. The income statement shows significant operational efficiency with EBIT and EBITDA margins at 27.08% and 39.67% respectively. The balance sheet is solid with a low Debt-to-Equity Ratio of 0.0051 and a strong Equity Ratio of 83.74%, indicating low leverage risk and a stable financial structure. Cash flow analysis further confirms the company's strong liquidity and cash generation capabilities.

Income Statement

The Descartes Systems Group shows strong financial performance with a consistent growth trajectory in revenue and profit. The TTM data indicates a Gross Profit Margin of 75.45% and a Net Profit Margin of 21.81%, reflecting efficient cost management. Revenue growth is robust at 10.27% from the previous year. EBIT and EBITDA margins are healthy at 27.08% and 39.67% respectively, suggesting operational efficiency and effective cost control.

Balance Sheet

The balance sheet reflects a solid financial position with a low Debt-to-Equity Ratio of 0.0051, indicating minimal leverage risk. Return on Equity (ROE) is strong at 10.16%, showcasing effective utilization of equity. The Equity Ratio is high at 83.74%, suggesting a stable financial structure with substantial owner investment relative to assets.

Cash Flow

Cash flow analysis demonstrates strong liquidity with a robust Operating Cash Flow to Net Income Ratio of 1.52, indicating excellent cash generation capabilities. The Free Cash Flow to Net Income Ratio is 1.48, highlighting effective conversion of net income into free cash flow. The Free Cash Flow Growth Rate is positive at 0.90%, suggesting steady cash flow growth over the period.

Breakdown
TTM	Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement		Total Revenue
631.75M	572.93M	486.01M	424.69M	348.66M	325.79M
	Gross Profit
476.53M	434.64M	372.69M	322.88M	258.75M	240.07M
	EBIT
171.07M	164.50M	130.43M	103.43M	71.40M	52.26M
	EBITDA
250.64M	218.49M	200.30M	167.96M	133.22M	113.97M
	Net Income Common Stockholders
137.74M	115.91M	102.24M	86.28M	52.10M	37.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
320.95M	320.95M	276.38M	213.44M	133.66M	44.40M
	Total Assets
1.47B	1.47B	1.32B	1.19B	1.06B	942.59M
	Total Debt
6.98M	6.98M	7.32M	11.41M	13.06M	13.40M
	Net Debt
-313.97M	-313.97M	-269.06M	-202.03M	-120.60M	-31.00M
	Total Liabilities
236.25M	236.25M	216.65M	185.61M	152.19M	120.88M
	Stockholders Equity
1.24B	1.24B	1.10B	999.82M	911.07M	821.71M
Cash Flow		Free Cash Flow
203.94M	202.12M	186.32M	171.31M	127.47M	99.35M
	Operating Cash Flow
209.31M	207.68M	192.40M	176.14M	131.23M	104.25M
	Investing Cash Flow
-291.84M	-148.26M	-121.63M	-95.11M	-52.16M	-296.95M
	Financing Cash Flow
-16.10M	-14.74M	-4.60M	1.52M	5.56M	210.17M

The Descartes Systems Group Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 157.74
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:DSG, the sentiment is Negative. The current price of 157.74 is below the 20-day moving average (MA) of 163.82, below the 50-day MA of 165.01, and above the 200-day MA of 147.65, indicating a neutral trend. The MACD of -2.18 indicates Positive momentum. The RSI at 39.24 is Neutral, neither overbought nor oversold. The STOCH value of 48.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:DSG.

The Descartes Systems Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DSG	79 Outperform	$13.49B	73.33	10.16%	―	15.98%	21.64%
ENGH	76 Outperform	$1.43B	17.64	13.65%	4.32%	10.68%	12.38%
CSU	76 Outperform	C$103.15B	119.28	23.93%	0.11%	23.24%	21.95%
KXS	72 Outperform	C$4.39B	157.81	0.01%	―	14.85%	-105.25%
OTEX	69 Neutral	$9.86B	11.06	15.62%	4.01%	-3.59%	432.46%
SFTC	68 Neutral	C$1.48B	27.46	-35.11%	2.13%	-6.14%	-14.96%
Sector *	59 Neutral	$22.39B	11.53	-18.05%	2.31%	5.00%	-25.89%

The Descartes Systems Group Corporate Events

Defense Trade Solutions Enhances Compliance with Descartes’ GlobalEASE

Defense Trade Solutions (DTS) has adopted Descartes’ GlobalEASE solution to streamline export compliance for the defense industry, enhancing efficiency and reducing costs. This integration allows DTS to better navigate complex regulations like ITAR and EAR, improving compliance workflows and minimizing risks, which is crucial given the current geopolitical and regulatory challenges.

Descartes Enhances Shipment Visibility for American Lamprecht

Descartes Systems Group has announced that American Lamprecht, a freight forwarder based in Illinois, is now offering its customers real-time visibility for air and ocean shipments via Descartes’ advanced tracking capabilities. This integration, part of the Descartes Global Logistics Network, allows for improved decision-making and risk management by providing real-time updates and predictive ETAs. The move is expected to enhance operational efficiency and customer service for American Lamprecht, positioning them to better meet customer expectations and streamline logistics workflows.

Descartes Unveils Advanced Trade Intelligence Technologies

Descartes Systems Group is set to unveil new technological advancements in its global trade intelligence software suite at its Innovation Forum in Washington, DC. These innovations aim to help businesses navigate complex trade regulations, enhance supply chain resilience, and improve compliance operations through AI-enabled tools and expanded analytics. The enhancements are designed to streamline compliance, accelerate trade intelligence queries, and support strategic decision-making, thereby reinforcing Descartes’ position as a leader in trade intelligence solutions.

Descartes to Announce Fiscal 2024 Financial Results

Descartes Systems Group has announced that it will release its fiscal 2024 fourth-quarter and year-end financial results on March 5, 2025. The announcement will be followed by a conference call by the executive management team to discuss the results. The results and conference call signify an important time for stakeholders to assess the company’s financial health and strategic positioning in the logistics industry.

Technology as a Catalyst for Growth in Global Trade: Descartes Study

Descartes Systems Group’s recent study highlights that 74% of supply chain leaders find technology crucial for growth amidst global trade complexities, with expectations rising to 88% for rapidly growing companies. Key technologies like global trade intelligence and analytics are seen as vital for competitiveness, enabling businesses to navigate challenges such as tariffs and geopolitical instability while building resilient supply chains.

Giltner Logistics Optimizes Cash Flow with Descartes and Upwell Integration

Descartes Systems Group has announced that Giltner Logistics is enhancing its accounts receivable processes by integrating Descartes Aljex transportation management system with Upwell’s accounts receivable technology. This collaboration streamlines Giltner’s invoicing and payment cycles, significantly reducing manual efforts and improving cash flow management. The integration is expected to provide third-party logistics providers with improved liquidity and operational efficiency, driving sustainable business growth and improved customer satisfaction in the logistics industry.

Descartes Boosts IDS Logistics Efficiency

Descartes Systems Group’s cloud-based transportation management system is helping IDS, a European logistics provider, reduce costs and enhance customer experiences by optimizing transport operations. The system automates processes, ensuring accurate billing and compliance with EU emissions regulations, ultimately improving operational efficiency for logistics businesses.