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The Descartes Systems Group
(TSX:DSG)
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Rating:80Outperform
Price Target:
C$128.00
▲(19.27% Upside)
Action:Reiterated
Date:09/15/26
The score is driven primarily by very strong financial performance (high margins, strong cash conversion, and minimal leverage) and a constructive earnings update with record results and confident cash-flow outlook. Technicals are supportive but not decisively strong due to mixed momentum indicators. Valuation is the main constraint given the elevated P/E and no dividend yield support.
Positive Factors
Recurring SaaS and network revenue model
A predominantly recurring subscription model supports revenue visibility and customer retention, while transaction-based network fees can expand with workflow activity. This combination gives Descartes a durable base for compounding revenue as logistics participants use more applications and connectivity services.
Negative Factors
Recent growth acceleration may not be fully durable
The gap between exceptional trailing growth and more moderate historical annual growth creates a durability risk. If recent acceleration normalizes, revenue and earnings expansion could slow, making future operating leverage and reinvestment capacity less powerful than current results suggest.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring SaaS and network revenue model
A predominantly recurring subscription model supports revenue visibility and customer retention, while transaction-based network fees can expand with workflow activity. This combination gives Descartes a durable base for compounding revenue as logistics participants use more applications and connectivity services.
Read all positive factors
The Descartes Systems Group (DSG) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$9.75B
Dividend YieldN/A
Average Volume (3M)643.00K
Price to Earnings (P/E)36.8
Beta (1Y)0.73
Revenue Growth12.43%
EPS Growth25.58%
CountryCA
Employees2,384
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)2.19
Shares Outstanding85,548,550
10 Day Avg. Volume330,836
30 Day Avg. Volume642,997
Financial Highlights & Ratios
PEG Ratio2.85
Price to Book (P/B)3.99
Price to Sales (P/S)8.79
P/FCF Ratio24.13
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$147.12Price Target Upside37.09% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering7
EPS Forecast (FY)3.22
Revenue Forecast (FY)C$1.15B
The Descartes Systems Group Business Overview & Revenue Model
Company Description
Descartes Systems Group Inc. provides cloud-hosted solutions specifically designed for managing logistics and supply chain operations. Its core mission is to enhance the productivity, overall performance, and security for businesses worldwide that...
How the Company Makes Money
Descartes primarily makes money by selling subscription access to its cloud/SaaS logistics software applications and the underlying network/services that connect trading partners and logistics participants. The core revenue model is predominantly ...
The Descartes Systems Group Earnings Call Summary
Earnings Call Date:Sep 10, 2026
(Q2-2027)
| % Change Since: |
Next Earnings Date:Dec 09, 2026
Earnings Call Sentiment Positive
The call was strongly positive overall. Descartes reported record revenue, profitability, margins, and operating cash flow, accelerating organic services growth, market-share gains, higher MacroPoint tracking adoption, continued M&A activity, and significant AI investment opportunities. Management also highlighted substantial macro challenges, including lower freight volumes, geopolitical disruption, tariff uncertainty, trucking pressure, and regulatory complexity, but stated that the business was performing well despite the down freight market.Positive Updates
Record Q1 Revenue and Services Growth
Total revenue reached a record $193.6 million, up approximately 15% from $168.7 million in Q1 last year. Services revenue also reached a record $180.5 million, up 15% from $156.6 million, and represented 93% of total revenue.
Negative Updates
Challenging Freight Environment
Management described the shipping market as challenging and costly, primarily because of the Iran war's impact on moving goods and ongoing tariff uncertainty. The company expects these conditions to remain challenging throughout Q2.
Read all updates
Q2-2027 Updates
Positive
Negative
Record Q1 Revenue and Services Growth
Total revenue reached a record $193.6 million, up approximately 15% from $168.7 million in Q1 last year. Services revenue also reached a record $180.5 million, up 15% from $156.6 million, and represented 93% of total revenue.
Read all positive updates
Company Guidance
For Q2 of fiscal 27, as of May 1, 2026, using foreign exchange rates of $0.74 to the Canadian dollar, $1.17 to the euro, and $1.36 to the pound, Descartes estimated baseline revenues of approximately $169 million, baseline operating expenses of approximately $102 million, and baseline adjusted EBITDA calibration of approximately $66.5 million, or approximately 39% of baseline revenues; it is keeping its adjusted EBITDA operating margin target range at 40% to 45%. For the remainder of fiscal 2027, it expects strong operating cash flow conversion north of 80% of adjusted EBITDA, approximately $4 million to $6 million in additional capital expenditures this coming year, amortization expense of $53.5 million, contingent consideration payments of up to approximately $9 million, an income tax rate in the range of 25% to 30% of pretax income, and stock compensation of approximately $24 million.The Descartes Systems Group Financial Statement Overview
Summary
Income Statement
88
Very Positive
Balance Sheet
93
Very Positive
Cash Flow
90
Very Positive
| Breakdown | TTM | Jan 2026 | Jan 2025 | Jan 2023 | Jan 2022 | Jan 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 775.17M | 728.99M | 651.00M | 572.93M | 486.01M | 424.69M |
| Gross Profit | 601.59M | 561.93M | 492.43M | 434.64M | 372.69M | 322.88M |
| EBITDA | 337.45M | 305.19M | 267.63M | 218.49M | 200.30M | 167.96M |
| Net Income | 188.01M | 163.77M | 143.27M | 115.91M | 102.24M | 86.28M |
Balance Sheet | ||||||
| Total Assets | 1.96B | 1.88B | 1.62B | 1.47B | 1.32B | 1.19B |
| Cash, Cash Equivalents and Short-Term Investments | 400.89M | 353.55M | 231.92M | 319.07M | 276.21M | 213.48M |
| Total Debt | 7.54M | 8.29M | 7.75M | 6.94M | 7.32M | 11.41M |
| Total Liabilities | 312.19M | 274.44M | 257.69M | 234.86M | 216.52M | 185.65M |
| Stockholders Equity | 1.65B | 1.61B | 1.36B | 1.23B | 1.10B | 1.00B |
Cash Flow | ||||||
| Free Cash Flow | 299.15M | 265.61M | 212.53M | 202.12M | 186.32M | 171.31M |
| Operating Cash Flow | 306.37M | 271.46M | 219.27M | 207.68M | 192.40M | 176.14M |
| Investing Cash Flow | -103.05M | -160.45M | -296.95M | -148.26M | -121.63M | -95.11M |
| Financing Cash Flow | -41.25M | 5.15M | -3.63M | -14.74M | -4.60M | 1.52M |
The Descartes Systems Group Technical Analysis
Positive
107.32
Price Trends
108.81
Positive
104.53
Positive
103.46
Positive
Market Momentum
1.88
Negative
58.79
Neutral
63.70
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 107.32 is below the 20-day moving average (MA) of 110.23, below the 50-day MA of 108.81, and above the 200-day MA of 103.46, indicating a bullish trend. The MACD of 1.88 indicates Negative momentum. The RSI at 58.79 is Neutral, neither overbought nor oversold. The STOCH value of 63.70 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | C$9.75B | 36.80 | 11.69% | ― | 12.43% | 25.58% | |
76 Outperform | C$902.84M | 13.09 | 11.70% | 7.28% | -4.73% | -5.61% | |
71 Outperform | C$4.76B | 39.47 | 20.88% | ― | 15.99% | 252.03% | |
70 Outperform | C$7.67B | 4.98 | 28.29% | 4.76% | 0.54% | 54.92% | |
69 Neutral | C$830.51M | 19.85 | 113.64% | ― | 11.23% | 65.79% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
60 Neutral | C$1.86B | -14.59 | -6.60% | ― | 10.59% | 84.91% |
* Technology Sector Average
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The Descartes Systems Group
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The Descartes Systems Group Corporate Events
Business Operations and StrategyM&A Transactions
Descartes Expands AI-Driven Logistics Platform with Extensiv Acquisition
Positive
Sep 1, 2026
The Descartes Systems Group has acquired Extensiv, a California-based provider of AI-enabled warehouse management and omnichannel fulfillment solutions for third-party logistics providers and ecommerce brands, for approximately US $120 million in ...
Business Operations and StrategyRegulatory Filings and Compliance
Descartes Helps K&R Automate EU Ecommerce Air Cargo Security Filings
Positive
Aug 31, 2026
Descartes Systems Group has deployed its global security filing solution for Michigan-based KR International Services to automate European Union Import Control System 2 security filings for high-volume ecommerce air cargo. Using the Descartes Glob...
Business Operations and StrategyM&A Transactions
Descartes Buys Tai Software to Boost AI-Driven Freight Brokerage Platform
Positive
Aug 24, 2026
The Descartes Systems Group has acquired California-based Tai Software, an AI-powered transportation management platform for freight brokers, in a cash deal valued at approximately US$100 million. Tai’s system orchestrates the full shipment ...
Business Operations and StrategyProduct-Related Announcements
Descartes Launches Embedded AI Document Management to Speed Customs and Shipping
Positive
Aug 18, 2026
Descartes Systems Group has introduced AI-powered Image Document Management capabilities embedded into its customs and transportation solutions to streamline trade document handling. The new logistics-trained AI agents convert commercial invoices,...
Business Operations and Strategy
ArrowXL Cuts Fleet Mileage 13% with Descartes’ AI-Powered Route Optimization
Positive
Aug 11, 2026
Descartes Systems Group, a logistics technology company specializing in AI-driven fleet and supply chain management, has helped ArrowXL by JP Home, the U.K.’s largest two-person home delivery and warehousing specialist, significantly optimiz...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.