The Descartes Systems Group (DSG) AI Stock Analysis

• Market Cap: C$10.49B
• Dividend Yield: N/A
• Average Volume (3M): 247.26K
• Price to Earnings (P/E): 49.1
• Beta (1Y): 0.97
• 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: 157,958
• 30 Day Avg. Volume: 247,256
• PEG Ratio: 2.78
• Price to Book (P/B): 7.43
• Price to Sales (P/S): 15.53
• P/FCF Ratio: 47.56
• 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$157.00
• Price Target Upside: 28.73% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 11
• EPS Forecast (FY): 2.56
• Revenue Forecast (FY): C$1.01B

• Rating: 82 Outperform
• Price Target: C$143.00 ▲(17.25% Upside)

The Descartes Systems Group's overall stock score of 82 reflects its strong financial performance and positive earnings call sentiment, which are the most significant factors. The company's robust cash flow and low leverage enhance its financial stability. However, the high P/E ratio and lack of dividend yield present valuation concerns. Technical analysis indicates mixed momentum, with short-term bullish signals but potential resistance in the longer term.

Positive Factors

Strong Cash Position

A strong cash position enhances financial flexibility, enabling DSG to invest in growth opportunities, weather economic downturns, and maintain operations without relying on external financing.

AI Integration

AI integration drives innovation and efficiency, improving service delivery and operational processes, which can lead to long-term competitive advantages and market leadership in logistics solutions.

Revenue Growth

Consistent revenue growth underscores the company's ability to expand its market reach and enhance product adoption, supporting long-term business sustainability and shareholder value.

Negative Factors

Regulatory Challenges

Regulatory changes can increase operational costs and complexity, potentially affecting service delivery and profitability, necessitating strategic adjustments to maintain compliance and efficiency.

Global Trade Environment

Geopolitical tensions and trade uncertainties can disrupt supply chains and affect demand, posing risks to revenue stability and requiring adaptive strategies to mitigate potential impacts.

Valuation Concerns

High valuation ratios may limit stock price appreciation potential, as investors may be cautious about paying a premium, impacting future capital raising and investment attractiveness.

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

The Descartes Systems Group exhibits strong financial health across all verticals. The income statement shows consistent growth and high profitability, while the balance sheet reflects low leverage and effective equity utilization. Cash flow metrics underscore the company's robust cash generation capabilities, supporting its operational and strategic initiatives. Overall, the financial statements indicate a well-managed company with a stable and promising financial outlook.

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: 121.96
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• 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 121.96 is below the 20-day moving average (MA) of 122.50, below the 50-day MA of 123.04, and below the 200-day MA of 137.85, indicating a bearish trend. The MACD of 0.59 indicates Positive momentum. The RSI at 48.72 is Neutral, neither overbought nor oversold. The STOCH value of 17.87 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	82 Outperform	C$10.49B	49.06	10.70%	―	14.55%	15.55%
KXS	78 Outperform	C$4.90B	101.66	8.24%	―	15.11%	75.40%
OTEX	72 Outperform	C$11.48B	17.08	12.32%	3.27%	-5.01%	13.21%
ENGH	69 Neutral	C$1.12B	15.33	12.20%	5.69%	-0.72%	-9.27%
DCBO	63 Neutral	C$864.92M	28.46	49.99%	―	16.25%	31.71%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
LSPD	53 Neutral	C$2.27B	-2.58	-37.01%	―	17.23%	-435.45%

The Descartes Systems Group Corporate Events

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.

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.

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.

Descartes Systems Group to Announce Q3 Fiscal 2026 Financial Results

Descartes Systems Group has announced that it will release its third quarter fiscal 2026 financial results on December 03, 2025, after market close. The announcement will be followed by a conference call hosted by the executive management team to discuss the results, providing stakeholders with insights into the company’s financial performance and strategic direction. This event is significant for investors and stakeholders as it offers a detailed look at Descartes’ operational progress and market positioning.

Descartes’ Solution Boosts Ecommerce Efficiency and Inclusivity

Descartes Systems Group announced that its ecommerce warehouse management system is being utilized by Switzerland’s ESPAS and Germany’s Steinehelden to significantly enhance ecommerce fulfillment productivity by 500%. The solution is particularly beneficial in integrating workers with disabilities into the workforce by providing a user-friendly interface and customizable workflows. This has led to reduced error rates, increased customer satisfaction, and improved employee confidence and responsibility. The deployment of Descartes’ solution addresses workforce challenges in the logistics industry, supporting recruitment and retention strategies by facilitating access to the labor market for all individuals.

Descartes’ Solution Fuels CPGIO’s Ecommerce Growth

Descartes Systems Group announced that CPGIO, an Illinois-based third-party logistics provider, has achieved significant growth using Descartes’ ecommerce inventory and order management solution. By centralizing and streamlining its multichannel distribution, CPGIO increased its order capacity fivefold, expanding into new markets and maintaining its competitive position on platforms like Amazon. This development underscores Descartes’ role in enhancing operational efficiency and enabling rapid market expansion for businesses in the ecommerce sector.

Givaudan Enhances Compliance with Descartes’ Screening Solution

Givaudan, a leader in fragrance and beauty, has implemented Descartes Systems Group’s denied party screening solution to automate compliance with international trade regulations. This move enhances Givaudan’s global compliance framework, improves operational efficiency, and strengthens its ethical business practices by automating real-time screening of business partners against denied and sanctioned party lists. The solution, part of Descartes’ Global Trade Intelligence software suite, allows Givaudan to reduce manual compliance checks and focus on strategic operations, mitigating regulatory and reputational risks. This collaboration highlights the importance of automated compliance tools in maintaining supply chain agility and integrity in a complex trade environment.

Crystal Art Gallery Boosts Ecommerce Fulfillment with Descartes Sellercloud

Crystal Art Gallery, a leading supplier of art and home décor products, has significantly enhanced its ecommerce fulfillment capabilities using Descartes Sellercloud™. By integrating Descartes’ warehouse management system, Crystal Art Gallery centralized its operations, boosting order fulfillment by five times and reducing shipping costs. This strategic move allows the company to efficiently manage its extensive inventory across multiple sales channels, including major retailers and online marketplaces. Descartes’ ecommerce platform supports small to mid-market businesses in streamlining operations and adapting quickly to market changes, thereby enhancing their competitive edge.

Transportation Management Gains Strategic Importance in Logistics

Descartes Systems Group’s 9th Annual Global Transportation Management Benchmark Survey reveals that transportation management is increasingly seen as a strategic asset, with 81% of shippers and logistics services providers viewing it as a competitive advantage. Despite this, there remains a significant gap in automation, with only 17% of respondents fully automated. The study highlights a strong trend towards the adoption of generative AI, with 96% of companies using it for tasks like data entry and route optimization. The survey also indicates a positive growth outlook, with 72% of respondents expecting at least a 5% annual revenue growth over the next two years, driven by increased investment in transportation management systems.

Descartes and AiDock Boost Customs Assured’s Productivity by 30%

Descartes Systems Group has announced that Customs Assured, a UK-based customs consultancy, has achieved a 30% productivity gain by using Descartes e-Customs™ integrated with AiDock’s AI technology. This collaboration streamlines and automates the customs documentation process, reducing manual tasks and increasing accuracy and transparency for clients. The solution allows Customs Assured to handle more clients with a greater focus on compliance, demonstrating the impact of AI and automation in enhancing operational efficiency and service delivery in the customs sector.