The Descartes Systems Group (DSG) AI Stock Analysis

• Market Cap: $13.38B
• Dividend Yield: N/A
• Average Volume (3M): 126.88K
• Price to Earnings (P/E): 69.2
• Beta (1Y): 0.95
• Revenue Growth: 16.07%
• EPS Growth: 25.71%
• Country: CA
• Employees: 1,334
• Sector: Technology
• Sector Strength: 79
• Industry: Software - Application
• EPS (TTM): 0.61
• Shares Outstanding: 85,390,144
• 10 Day Avg. Volume: 148,151
• 30 Day Avg. Volume: 126,883
• PEG Ratio: 17.48
• Price to Book (P/B): 6.74
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 43.15
• Enterprise Value/Market Cap: 0.67
• Enterprise Value/Revenue: 3.61
• Enterprise Value/Gross Profit: 18.16
• Enterprise Value/Ebitda: 9.20
• 1Y Price Target: $169.95
• Price Target Upside: 7.67% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

• Rating: 80 Outperform
• Price Target: C$181.00 ▲(14.67%Upside)

The Descartes Systems Group's overall score of 80 reflects its strong financial performance and robust earnings growth, which are the most significant factors driving the score. Positive technical indicators support the stock's bullish outlook, although caution is advised due to potential overvaluation as indicated by the high P/E ratio. Despite some external challenges, the company's strategic growth initiatives and strong cash position enhance its resilience.

Positive Factors

Acquisition Strategy

The acquisition of 3GTMS strengthens Descartes’s presence in North America and enhances its transportation management offerings.

Financial Performance

Descartes reported a solid fourth quarter with services revenue and adjusted EBITDA growing 15% and 14%, respectively.

Negative Factors

Tariff Impact

Tariff uncertainty might weigh on shipping volumes and organic growth in the near-term, which may in turn constrain the stock's multiple.

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 Inc. provides cloud-based logistics and supply chain management business process solutions that focuses on enhancing the productivity, performance, and security of logistics-intensive businesses worldwide. Its Logistics Technology platform offers a range of modular, cloud-based, and interoperable web and wireless logistics management applications, which unites a community of logistics-focused parties, allowing them to transact business. The company provides a suite of solutions that include routing, mobile and telematics; transportation management and e-commerce enablement; customs and regulatory compliance; trade data; global logistics network services; and broker and forwarder enterprise systems. It offers its customers to use its modular, software-as-a-service, and data solutions to route, schedule, track, and measure delivery resources; plan, allocate, and execute shipments; rate, audit, and pay transportation invoices; access and analyze global trade data; research and perform trade tariff and duty calculations; file customs and security documents for imports and exports; and various other logistics processes. The company also provides cloud-based ecommerce warehouse management solutions; consulting, implementation, and training services; and maintenance and support services. It primarily focuses on serving transportation providers, logistics service providers, and distribution-intensive companies, as well as manufacturers, retailers, distributors, and mobile business service providers. The company was incorporated in 1981 and is headquartered in Waterloo, Canada.

How the Company Makes Money

The Descartes Systems Group primarily generates revenue through a subscription-based model for its cloud-based logistics software solutions. The company's key revenue streams include recurring subscription fees from its software-as-a-service (SaaS) offerings, professional services for implementation and customization, and ongoing customer support and maintenance contracts. Additionally, Descartes benefits from strategic partnerships and collaborations with technology providers, logistics companies, and industry associations, which enhance their service offerings and expand their market reach. These partnerships, along with a focus on innovation and customer-centric solutions, contribute to Descartes' sustained financial performance and growth.

The Descartes Systems Group Financial Statement Overview

Summary

The Descartes Systems Group exhibits strong financial health, with impressive revenue and profit growth, robust margins, and efficient cash flow management. The company's low leverage and high equity ratio enhance its financial stability, positioning it well for future growth and resilience against potential economic fluctuations.

Income Statement

The Descartes Systems Group has demonstrated strong revenue growth with a Revenue Growth Rate of approximately 13.62% from 2024 to 2025. The Gross Profit Margin is robust at 75.63%, indicating efficient cost management. The Net Profit Margin stands at 22.00%, reflecting strong profitability. The EBIT Margin of 27.83% and EBITDA Margin of 40.48% further highlight the company's operational efficiency and profitability.

Balance Sheet

The company maintains a solid financial position with a low Debt-to-Equity Ratio of 0.01, indicating low leverage and financial stability. The Return on Equity (ROE) is strong at 10.34%, showing effective use of shareholder funds. The Equity Ratio is high at 84.08%, suggesting a strong capital structure with significant equity financing.

Cash Flow

Operating Cash Flow increased to $219 million, showing strong cash generation. The Free Cash Flow Growth Rate is 5.15%, indicating positive cash flow trajectory. The Operating Cash Flow to Net Income Ratio of 1.53 and Free Cash Flow to Net Income Ratio of 1.48 suggest efficient conversion of profits into cash, supporting financial flexibility.

Breakdown
Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement		Total Revenue
651.00M	572.93M	486.01M	424.69M	348.66M
	Gross Profit
492.43M	434.64M	372.69M	322.88M	258.75M
	EBIT
181.12M	164.50M	130.43M	103.43M	71.40M
	EBITDA
263.58M	218.49M	200.30M	167.96M	133.22M
	Net Income Common Stockholders
143.27M	115.91M	102.24M	86.28M	52.10M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
236.14M	320.95M	276.38M	213.44M	133.66M
	Total Assets
1.65B	1.47B	1.32B	1.19B	1.06B
	Total Debt
7.90M	6.98M	7.32M	11.41M	13.06M
	Net Debt
-228.24M	-313.97M	-269.06M	-202.03M	-120.60M
	Total Liabilities
262.38M	236.25M	216.65M	185.61M	152.19M
	Stockholders Equity
1.39B	1.24B	1.10B	999.82M	911.07M
Cash Flow		Free Cash Flow
212.53M	202.12M	186.32M	171.31M	127.47M
	Operating Cash Flow
219.27M	207.68M	192.40M	176.14M	131.23M
	Investing Cash Flow
-296.95M	-148.26M	-121.63M	-95.11M	-52.16M
	Financing Cash Flow
-3.63M	-14.74M	-4.60M	1.52M	5.56M

The Descartes Systems Group Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 157.85
• 50DMA: Positive
• 100DMA: Positive
• 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 Positive. The current price of 157.85 is above the 20-day moving average (MA) of 156.63, above the 50-day MA of 148.93, and above the 200-day MA of 152.32, indicating a bullish trend. The MACD of 2.72 indicates Positive momentum. The RSI at 56.81 is Neutral, neither overbought nor oversold. The STOCH value of 40.49 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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	80 Outperform	$13.38B	69.24	10.92%	―	16.07%	25.71%
Sector *	61 Neutral	$11.55B	10.41	-6.86%	2.93%	7.50%	-8.30%
OTEX		$7.27B	11.47	15.87%	3.68%	―	―
KXS	73 Outperform	C$5.57B	400.41	2.32%	―	15.14%	-31.45%
EGHSF		$1.07B	17.49	14.76%	4.10%	―	―
DCBO		$795.19M	35.22	41.12%	―	―	―
LMN	70 Outperform	C$12.00B	129.37	9.89%	―	35.90%	97.74%

The Descartes Systems Group Corporate Events

ArrowXL Enhances Delivery Efficiency with Descartes’ Solution

ArrowXL, the UK’s largest two-person home delivery specialist, has implemented Descartes’ route planning and execution solution to optimize its last mile delivery operations. This strategic move allows ArrowXL to automate its route planning, increasing transportation capacity and minimizing CO2 emissions, thereby enhancing operational efficiency and sustainability. The integration of Descartes’ cloud-based solution not only improves route productivity and reduces costs but also supports ArrowXL in maintaining a high level of customer experience by offering more delivery slots and improving service levels.

The most recent analyst rating on (TSE:DSG) stock is a Buy with a C$108.00 price target. To see the full list of analyst forecasts on The Descartes Systems Group stock, see the TSE:DSG Stock Forecast page.

Younger Consumers Propel Ecommerce Growth Amid Delivery Challenges

Descartes Systems Group’s annual ecommerce study reveals that younger consumers, particularly those aged 18-35, are significantly driving online buying growth despite a general slowdown in the ecommerce market. However, a notable 79% of these younger consumers have experienced delivery problems, highlighting a gap between consumer expectations and delivery performance. This dissatisfaction poses a risk to retailers and delivery partners as it could impact the potential lifetime customer value of this demographic. The study, conducted with 8,000 consumers across Europe and North America, aims to provide insights into ecommerce buying behaviors and home delivery performance, emphasizing the need for improved delivery experiences to meet consumer demands.

The most recent analyst rating on (TSE:DSG) stock is a Buy with a C$108.00 price target. To see the full list of analyst forecasts on The Descartes Systems Group stock, see the TSE:DSG Stock Forecast page.

Descartes Systems Group to Announce Q1 Fiscal 2026 Results

Descartes Systems Group has announced that it will release its first quarter fiscal 2026 financial results on June 4, 2025, after the market closes. The company will host a conference call to discuss these results, providing stakeholders with insights into its financial performance. This announcement is significant for stakeholders as it provides an opportunity to assess the company’s financial health and strategic direction in the logistics software industry.

Descartes Enhances Air Messaging Solution with IATA’s ONE Record Standard

Descartes Systems Group has enhanced its Descartes Air Messaging™ solution to align with IATA’s ONE Record messaging standard, which aims to digitize air cargo messaging services by 2026. This advancement is expected to improve transparency, efficiency, and speed in air cargo operations, benefiting stakeholders by streamlining processes and reducing costs. The initiative is supported by Lufthansa Cargo, which sees it as a crucial step in providing customers with real-time data-sharing capabilities, thereby enhancing the customer experience in air cargo operations.

Lane One Transport Enhances Operations with Descartes and Parade AI Solutions

The Descartes Systems Group announced that Lane One Transport, a Texas-based freight brokerage leader, is automating its carrier communication and qualification processes using Parade CoDriver, an AI-powered solution integrated with Descartes’ Aljex transportation management system and MyCarrierPortal. This integration allows Lane One to enhance load coverage, gain pricing insights, and reduce carrier fraud risk by automating traditionally manual processes, thus improving operational efficiency and decision-making in carrier engagement.

Skypace Boosts Freight Booking Efficiency with Descartes Solution

Descartes Systems Group announced that Skypace, an international freight forwarder, is utilizing the Descartes Global Price Management solution to enhance its quote-to-book platform with accurate shipping rates, significantly improving the speed and accuracy of freight bookings. This integration has reduced rate processing times by 85% and increased pricing accuracy, leading to enhanced customer satisfaction and operational efficiencies. The solution allows Skypace to process over 20,000 freight quotes per hour, providing real-time rate visibility and transforming traditional processes into a seamless digital experience.

Skypace Boosts Freight Booking Efficiency with Descartes Solution

Descartes Systems Group announced that Skypace, an international freight forwarder, is utilizing the Descartes Global Price Management solution to enhance the speed and accuracy of its freight bookings. This integration has significantly reduced rate processing times by 85% and improved pricing accuracy, leading to increased customer satisfaction and operational efficiency. The solution enables Skypace to process over 20,000 freight quotes per hour, providing real-time rate visibility and transforming traditional rate management processes.

Descartes Study: Trade Compliance as a Competitive Edge for High-Growth Companies

Descartes Systems Group has released a study highlighting that 39% of high-growth companies view trade compliance as a competitive advantage rather than just a regulatory requirement. The study underscores the importance of technology in trade compliance strategies, with 72% of fast-growing companies considering it a key competitive differentiator. Additionally, these companies are investing in building well-resourced compliance teams to navigate the volatile trade landscape effectively, thereby turning compliance into a growth engine and enhancing supply chain resilience.

Descartes Systems Group Reports Strong Fiscal 2025 Results

The Descartes Systems Group reported strong financial results for fiscal 2025, with a 14% increase in revenues to $651 million and a 27% rise in income from operations to $181.1 million. The company attributes its growth to strategic investments in complementary services, which have enhanced its Global Logistics Network, aiding clients in navigating the evolving global trade environment. These results underscore Descartes’ robust market positioning and its ability to deliver value to stakeholders amid increasing trade complexities.