The Descartes Systems Group (DSG) AI Stock Analysis

• Market Cap: $7.87B
• Dividend Yield: N/A
• Average Volume (3M): 235.58K
• Price to Earnings (P/E): 36.8
• Beta (1Y): 1.09
• Revenue Growth: 14.55%
• EPS Growth: 15.55%
• Country: CA
• Employees: 1,334
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 0.70
• Shares Outstanding: 85,986,824
• 10 Day Avg. Volume: 306,159
• 30 Day Avg. Volume: 235,578
• PEG Ratio: 6.08
• Price to Book (P/B): 6.15
• Price to Sales (P/S): 13.22
• P/FCF Ratio: 37.48
• Enterprise Value/Market Cap: 0.71
• Enterprise Value/Revenue: 7.91
• Enterprise Value/Gross Profit: 10.30
• Enterprise Value/Ebitda: 19.12
• 1Y Price Target: $151.78
• Price Target Upside: 65.92% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 11
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 72 Outperform
• Price Target: C$100.00 ▲(9.31% Upside)

The score is driven primarily by strong financial performance (high margins, low leverage, and strong cash generation) and a positive earnings call with record growth and expanding EBITDA margin. These strengths are partially offset by very weak technical momentum (price far below key moving averages, deeply oversold RSI/Stoch, and negative MACD) and a premium valuation (P/E 36.374) without a provided dividend yield.

Positive Factors

Recurring subscription and diversified revenue

A subscription-first model with additional transaction fees and professional services creates predictable, recurring revenue and diversified cash streams. This supports stable ARR, higher customer retention and scalability across client sizes, improving long-term revenue durability and margin visibility.

Strong cash generation

Robust operating cash flow provides flexibility to fund organic investment, bolt-on acquisitions and R&D without relying on external financing. Consistent cash generation strengthens resilience through cycles and supports reinvestment in product and AI capabilities that drive sustainable competitive advantage.

Very low leverage / strong liquidity

Minimal leverage and large cash plus an undrawn credit line give the company significant financial flexibility. This reduces refinancing risk, enables opportunistic M&A, and cushions operational shocks, supporting long-term strategic initiatives and capital allocation consistency.

Negative Factors

Exposure to global trade volatility

Descartes' core products serve cross-border logistics and customs workflows, so prolonged trade disputes or shifts in tariff regimes can reduce transaction volumes and customer spend. Such structural volatility can depress organic growth and pressure service-related revenues over months.

Regulatory change risk (transportation)

Material regulatory shifts in transportation require product updates and customer compliance support, driving implementation costs and potential delayed sales cycles. Over time, recurring investment to adapt products can compress margins and slow new-customer adoption in affected segments.

Modest trailing revenue growth

While pockets of strong quarterly performance exist, subdued TTM organic revenue growth suggests constraints in core market expansion. Reliance on acquisitions for scale increases integration risk and may challenge sustainable, high-single-digit organic growth without continued product or geographic expansion.

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

Descartes generates revenue primarily through subscription fees for its cloud-based software solutions, which are offered on a recurring basis. The company also earns money from transaction fees associated with its logistics services, such as customs brokerage and transportation management. Additionally, DSG generates income through professional services, including consulting and implementation services for its software products. Strategic partnerships with carriers, freight forwarders, and logistics providers further enhance its offerings and contribute to its revenue. The company's focus on providing scalable solutions allows it to cater to businesses of all sizes, thus diversifying its revenue streams.

The Descartes Systems Group Financial Statement Overview

Summary

Strong overall fundamentals supported by high profitability (gross margin 76.06%, net margin 21.64%), robust operating efficiency (EBIT margin 28.55%, EBITDA margin 40.58%), a very low debt profile (debt-to-equity 0.53%), and solid cash conversion (operating cash flow to net income 1.12; FCF to net income 97.26%) with positive FCF growth (5.76% TTM).

Income Statement

The Descartes Systems Group has demonstrated consistent revenue growth with a TTM increase of 2.76%. The company maintains strong profitability metrics with a gross profit margin of 76.06% and a net profit margin of 21.64%. EBIT and EBITDA margins are also robust at 28.55% and 40.58%, respectively. These figures indicate efficient cost management and strong operational performance.

Balance Sheet

The company's balance sheet is solid, with a very low debt-to-equity ratio of 0.53%, indicating minimal leverage and financial risk. The return on equity stands at 10.44%, reflecting effective use of shareholder funds. The equity ratio is strong, suggesting a stable financial structure with a significant portion of assets financed by equity.

Cash Flow

Cash flow metrics are impressive, with a free cash flow growth rate of 5.76% TTM. The operating cash flow to net income ratio is 1.12, and the free cash flow to net income ratio is 97.26%, indicating strong cash generation relative to earnings. These metrics highlight the company's ability to generate cash efficiently and sustain operations.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	703.71M	651.00M	572.93M	486.01M	424.69M	348.66M
Gross Profit	540.44M	492.43M	434.64M	372.69M	322.88M	258.75M
EBITDA	291.07M	267.63M	218.49M	200.30M	167.96M	133.22M
Net Income	155.53M	143.27M	115.91M	102.24M	86.28M	52.10M
Balance Sheet
Total Assets	1.82B	1.62B	1.47B	1.32B	1.19B	1.06B
Cash, Cash Equivalents and Short-Term Investments	278.68M	231.92M	319.07M	276.21M	213.48M	133.35M
Total Debt	7.60M	7.75M	6.94M	7.32M	11.41M	13.03M
Total Liabilities	269.03M	257.69M	234.86M	216.52M	185.65M	151.83M
Stockholders Equity	1.55B	1.36B	1.23B	1.10B	1.00B	908.96M
Cash Flow
Free Cash Flow	244.64M	212.53M	202.12M	186.32M	171.31M	127.47M
Operating Cash Flow	251.02M	219.27M	207.68M	192.40M	176.14M	131.23M
Investing Cash Flow	-161.74M	-296.95M	-148.26M	-121.63M	-95.11M	-52.16M
Financing Cash Flow	6.13M	-3.63M	-14.74M	-4.60M	1.52M	5.56M

The Descartes Systems Group Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 91.48
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

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 91.48 is below the 20-day moving average (MA) of 112.22, below the 50-day MA of 117.59, and below the 200-day MA of 133.83, indicating a bearish trend. The MACD of -6.71 indicates Positive momentum. The RSI at 18.40 is Positive, neither overbought nor oversold. The STOCH value of 7.27 is Positive, 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	72 Outperform	$7.87B	36.80	10.70%	―	14.55%	15.55%
OTEX	70 Outperform	$8.09B	11.85	12.32%	3.27%	-5.01%	13.21%
ENGH	69 Neutral	C$973.54M	13.22	12.20%	5.69%	-0.72%	-9.27%
KXS	67 Neutral	C$3.35B	69.65	8.24%	―	15.11%	75.40%
DCBO	63 Neutral	$764.92M	25.17	49.99%	―	16.25%	31.71%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
LSPD	51 Neutral	C$1.87B	-2.12	-37.01%	―	17.23%	-435.45%

The Descartes Systems Group Corporate Events

Descartes Sets March 11 Date for Fiscal 2026 Year-End Results

Descartes Systems Group will release its fiscal 2026 fourth-quarter and year-end financial results after markets close on March 11, 2026, followed by a same-day conference call and live audio webcast hosted by its executive management team. The scheduled disclosure and investor call underscore the company’s ongoing engagement with capital markets and provide stakeholders in the logistics-technology sector with a key checkpoint on Descartes’ financial performance and strategic execution.

The most recent analyst rating on (TSE:DSG) stock is a Hold with a C$110.00 price target. To see the full list of analyst forecasts on The Descartes Systems Group stock, see the TSE:DSG Stock Forecast page.

Supergasbras Digitally Transforms LPG Distribution with Descartes Routing Platform

Supergasbras, one of Brazil’s leading liquefied petroleum gas distributors and part of SHV Energy, has overhauled its nationwide logistics network using Descartes Systems Group’s cloud-based route planning and fleet management technology. Deploying the platform across a fleet of more than 400 trucks and a 900-strong logistics team that moves over 400,000 tons of LPG monthly, the company reports faster and more transparent route planning, fewer stockouts, lower operating costs, and more reliable deliveries in regions with seasonal demand swings, aided by real-time synchronization of planning data across systems.
Descartes’ routing and fleet management solution gives Supergasbras automatic route planning based on current customer locations, tank levels and consumption rates, alongside delivery management and control tower capabilities that provide end-to-end visibility from planning through on-site delivery. By integrating the Descartes platform with sales, financial systems and the Faton billing application, Supergasbras has replaced manual file-based processes, allowing drivers to handle routing and invoicing in a single environment, reducing administrative workload and errors; the project underscores Descartes’ role as a logistics SaaS partner for large, complex distribution networks seeking digital transformation and data-driven operational gains.

The most recent analyst rating on (TSE:DSG) stock is a Buy with a C$105.00 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 Reports Record Q3 Financial Results and Announces Strategic Initiatives

The Descartes Systems Group reported record revenues and income from operations for its fiscal 2026 third quarter, with revenues reaching $187.7 million, marking an 11% increase from the previous year. The company also announced a CFO transition plan for the next fiscal year and an application to commence a normal course issuer bid, indicating strategic moves to strengthen its financial position and market presence.

The most recent analyst rating on (TSE:DSG) stock is a Buy with a C$126.00 price target. To see the full list of analyst forecasts on The Descartes Systems Group stock, see the TSE:DSG Stock Forecast page.

Estes Logistics Expands Operations with Descartes Technology

Estes Logistics, a division of Estes Express Lines, has significantly expanded its dedicated logistics operations by utilizing Descartes’ Global Logistics Network and routing technology over the past 15 years. This collaboration has enabled Estes to grow its revenue from under $200 million to over $500 million, while maintaining a high on-time delivery rate. The use of Descartes’ technology has allowed Estes to optimize complex fleet operations, improve route planning, and enhance customer service, thereby strengthening its competitive position in the logistics industry.

The most recent analyst rating on (TSE:DSG) stock is a Hold with a C$136.00 price target. To see the full list of analyst forecasts on The Descartes Systems Group stock, see the TSE:DSG Stock Forecast page.

Descartes Study Highlights Technology’s Crucial Role in Logistics Growth

Descartes Systems Group’s recent study reveals that 67% of freight forwarders and customs brokers consider technology crucial for growth, with automation and AI emerging as key differentiators in the logistics industry. The study highlights the challenges of global instability, tariff changes, and customer pricing pressure, while emphasizing the growing importance of AI and automation in achieving efficiency and competitive advantage. The findings suggest a shift towards more customized, data-driven services and indicate a divergence in technology adoption based on company size, with larger firms more likely to view technology as fundamental to growth.

The most recent analyst rating on (TSE:DSG) stock is a Hold with a C$136.00 price target. To see the full list of analyst forecasts on The Descartes Systems Group stock, see the TSE:DSG Stock Forecast page.