The Descartes Systems Group (DSG) AI Stock Analysis

• Market Cap: C$8.56B
• Dividend Yield: N/A
• Average Volume (3M): 382.64K
• Price to Earnings (P/E): 38.4
• Beta (1Y): 0.79
• Revenue Growth: 14.55%
• EPS Growth: 15.55%
• Country: CA
• Employees: 1,334
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 0.71
• Shares Outstanding: 85,986,824
• 10 Day Avg. Volume: 382,959
• 30 Day Avg. Volume: 382,637
• PEG Ratio: 2.39
• Price to Book (P/B): 3.99
• Price to Sales (P/S): 8.62
• P/FCF Ratio: 24.13
• 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$140.81
• Price Target Upside: 41.49% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 10
• EPS Forecast (FY): 3.14
• Revenue Forecast (FY): C$1.11B

• Rating: 76 Outperform
• Price Target: C$111.00 ▲(11.54% Upside)
• Action: Reiterated Date: 03/13/26
• Date: Action: Reiterated 03/13/26

The score is driven primarily by strong financial quality (high margins, strong cash conversion, and minimal leverage) and a positive earnings update with record results. Offsetting this are a technically weaker longer-term price trend and a relatively expensive valuation (high P/E with no dividend yield provided).

Positive Factors

Recurring SaaS model & connected logistics network

Descartes’ business is built on recurring SaaS and usage fees tied to a broad Global Logistics Network. That creates sticky, repeatable revenue, network effects and data advantages that support cross-sell, predictable cashflows and long-term product-led adoption.

High profitability and cash conversion

Sustained high gross and EBITDA margins alongside operating cash flow exceeding net income show durable earnings quality. Reliable FCF conversion supports reinvestment, M&A and balance sheet strength without reliance on external financing over the medium term.

Conservative balance sheet and acquisition capacity

A debt-free position, substantial cash and an undrawn credit line give Descartes durable financial flexibility. This supports disciplined inorganic growth (e.g., Finale Inventory), funds product investment, and reduces solvency risk during industry cyclicality.

Negative Factors

Uneven revenue growth profile

Revenue growth has been lumpy, with a notable slowdown in 2025 followed by re-acceleration. This unevenness makes long-term forecasting and operational planning harder, increasing the risk that investment and hiring outpace sustainable demand in future quarters.

Gross margin compression versus prior years

A decline from mid/high-70% gross margins to ~66% suggests structural mix shifts, pricing pressure or higher cost of delivery. Persistent compression would erode software economics and limit the upside from operating leverage despite strong operating margins today.

Exposure to trade and regulatory uncertainty

Descartes’ end customers operate in global trade flows; tariffs, geopolitical disruption and regulatory changes can reduce shipping volumes or force costly product changes. These structural external risks can depress demand and require ongoing product investment to maintain compliance.

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 primarily makes money by selling software-as-a-service (SaaS) and related services used to plan, execute, and monitor logistics and global trade activities. The company’s core revenue stream is recurring subscription and usage-based fees from customers that access Descartes’ cloud applications and its logistics network, including modules for transportation management, routing/dispatch and mobile resource management, shipment visibility, and global trade/customs compliance. In addition to recurring software/network fees, Descartes also generates revenue from professional services (such as implementation, configuration, integration, and training) that support customer onboarding and expansions. A meaningful driver of earnings is its strategy of acquiring logistics software and network businesses and then integrating them into its platform, which can add new products, customer relationships, and recurring revenue; specific partnership details contributing to earnings are null.

The Descartes Systems Group Financial Statement Overview

Summary

Strong overall fundamentals: high and expanding operating/EBITDA margins, reliable earnings-to-cash conversion (operating cash flow > net income), and a very conservative balance sheet with minimal debt. The main offset is uneven growth (notably the prior-year slowdown) and some gross margin compression versus earlier years.

Income Statement

Profitability is strong and improving: in the latest annual period (2026-01-31), gross margin remained high (~66%) while operating and EBITDA margins expanded to ~32% and ~44%, respectively, alongside a net margin of ~22%. Revenue growth re-accelerated to ~5.6% after a very soft 2025 growth rate, and earnings have scaled steadily over the multi-year period. The main weakness is that growth has been uneven (notably the sharp slowdown in 2025), and gross margin dipped versus prior years (mid-to-high 70% range previously), suggesting some mix/pricing or cost pressure even as operating leverage improved.

Balance Sheet

The balance sheet is very conservative: debt is minimal with debt-to-equity around ~0.5% in 2026 (and consistently very low historically), providing significant financial flexibility and low solvency risk. Equity and total assets have grown steadily over time, and returns on equity have improved to ~10.4% in 2026 from mid-single digits earlier in the period. A modest drawback is that returns, while improving, are not exceptionally high for software, and the company’s strong equity base can mechanically cap return metrics.

Cash Flow

Cash generation is high-quality and consistent: operating cash flow exceeds net income (about 1.23x in 2026), and free cash flow closely tracks net income (~0.98x), indicating strong earnings-to-cash conversion. Free cash flow grew meaningfully in 2026 (~8.6%) and has generally expanded over the period. The key weakness is that free-cash-flow growth has been volatile year to year (including a near-flat 2025), mirroring the uneven growth profile.

Breakdown	Jan 2026	Jan 2024	Jan 2023	Jan 2022	Jan 2021
Income Statement
Total Revenue	743.36M	651.00M	572.93M	486.01M	424.69M
Gross Profit	490.22M	492.43M	434.64M	372.69M	322.88M
EBITDA	328.90M	267.63M	218.49M	200.30M	167.96M
Net Income	167.00M	143.27M	115.91M	102.24M	86.28M
Balance Sheet
Total Assets	1.88B	1.62B	1.47B	1.32B	1.19B
Cash, Cash Equivalents and Short-Term Investments	353.55M	231.92M	319.07M	276.21M	213.48M
Total Debt	8.29M	7.75M	6.94M	7.32M	11.41M
Total Liabilities	274.44M	257.69M	234.86M	216.52M	185.65M
Stockholders Equity	1.61B	1.36B	1.23B	1.10B	1.00B
Cash Flow
Free Cash Flow	265.61M	212.53M	202.12M	186.32M	171.31M
Operating Cash Flow	271.46M	219.27M	207.68M	192.40M	176.14M
Investing Cash Flow	-160.45M	-296.95M	-148.26M	-121.63M	-95.11M
Financing Cash Flow	5.15M	-3.63M	-14.74M	-4.60M	1.52M

The Descartes Systems Group Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 99.52
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• 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 Neutral. The current price of 99.52 is above the 20-day moving average (MA) of 92.83, below the 50-day MA of 102.36, and below the 200-day MA of 126.16, indicating a neutral trend. The MACD of -0.62 indicates Negative momentum. The RSI at 55.32 is Neutral, neither overbought nor oversold. The STOCH value of 67.50 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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	76 Outperform	C$8.56B	38.38	10.76%	―	14.55%	15.55%
DCBO	74 Outperform	$750.47M	16.69	73.40%	―	16.25%	31.71%
KXS	69 Neutral	C$3.73B	49.33	8.24%	―	15.11%	75.40%
ENGH	63 Neutral	$831.72M	15.58	12.17%	5.69%	-0.72%	-9.27%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
OTEX	59 Neutral	C$7.90B	12.20	10.88%	3.27%	-5.01%	13.21%
LSPD	56 Neutral	C$1.67B	-12.26	-37.01%	―	17.23%	-435.45%

The Descartes Systems Group Corporate Events

Descartes Boosts AI-Driven Freight Visibility With MacroPoint OpsForce

Descartes has expanded artificial intelligence capabilities on its multimodal Global Logistics Network with the launch of MacroPoint OpsForce, a suite of AI agents that automate freight visibility workflows and maintain tracking continuity across complex supply chains. Built on real-time network data, OpsForce drives automated driver engagement, exception management and documentation for shippers, brokers, carriers and logistics service providers.

In just a few months, the AI agents have enabled over 720,000 automated driver engagements, connecting more than 435,000 additional drivers to the network and sharply reducing manual check calls. Customers are seeing up to full elimination of manual tracking calls, about a 30% rise in no-touch tracking, 1.5x productivity gains for tracking teams and faster settlement cycles, positioning Descartes as a key enabler of data-rich, AI-driven logistics operations for supply chain stakeholders.

The most recent analyst rating on (TSE:DSG) stock is a Buy with a C$90.00 price target. To see the full list of analyst forecasts on The Descartes Systems Group stock, see the TSE:DSG Stock Forecast page.

Vesta Freight Scales 18x with Descartes’ AI-Driven Transportation Management Suite

Descartes Systems Group announced that Vesta Freight, a Tennessee-based 3PL, has used Descartes’ integrated transportation management suite to scale from a start-up to a nationwide brokerage, achieving an 18-fold increase in monthly shipment volume. By replacing disconnected systems with a unified platform for brokerage execution, financial workflows, carrier onboarding, visibility, and fraud prevention, Vesta improved customer and carrier experience, accelerated revenue cycles, and reduced fraud risk.

The solution stack combines Descartes 3G TMS for automating core brokerage processes, MacroPoint for real-time multimodal visibility and capacity sourcing, MacroPoint FraudGuard for fraud detection, and MyCarrierPortal for carrier vetting and risk monitoring. Descartes has also embedded agentic AI to automate driver engagement, proof-of-delivery collection, and exception-based recovery workflows, helping brokers like Vesta operate more efficiently, maintain better KPI compliance, and support sustainable growth while reducing operational complexity.

The most recent analyst rating on (TSE:DSG) stock is a Buy with a C$95.00 price target. To see the full list of analyst forecasts on The Descartes Systems Group stock, see the TSE:DSG Stock Forecast page.

Descartes Unveils New AI Tools to Boost Global Supply Chain Efficiency

Descartes Systems Group is expanding its artificial intelligence and automation capabilities across its logistics technology portfolio, leveraging its Global Logistics Network to support shippers, carriers and logistics service providers. The company is presenting these advances at Manifest 2026 in Las Vegas, underscoring its focus on smarter, more secure and resilient supply chain operations.

New AI-driven global trade intelligence tools aim to cut false positives in denied party screening, improve tariff classification accuracy and make complex trade data easier to analyze through natural language queries. Enhancements for freight forwarders and customs brokers are designed to digitize trade documents, strengthen compliance and improve shipment visibility at scale.

In transportation management and real-time visibility, Descartes is deploying agentic AI to automate driver engagement, shipment tracking and proof-of-delivery capture, helping logistics operators meet demanding customer visibility KPIs. The company is also rolling out fleet and last mile capabilities that use AI to monitor driver safety, refine service time predictions and proactively mitigate delivery risks, targeting higher reliability and profitability for customers.

The most recent analyst rating on (TSE:DSG) stock is a Buy with a C$95.00 price target. To see the full list of analyst forecasts on The Descartes Systems Group stock, see the TSE:DSG Stock Forecast page.

Descartes 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.