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The Descartes Systems Group
(TSX:DSG)
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Rating:73Outperform
Price Target:
C$122.00
▲(13.68% Upside)
Action:Reiterated
Date:06/23/26
Strong financial quality (high margins, strong free-cash-flow conversion, and a very conservative balance sheet) is the primary support for the score. This is tempered by weak technicals (price below key moving averages with negative momentum) and a relatively rich P/E (~32), while the latest earnings call was constructive on execution and cash generation but highlighted meaningful macro-driven variability risk.
Positive Factors
Recurring services growth
The high share of services revenue supports a recurring, software-led business model with strong customer retention potential. Double-digit services growth and improving organic momentum indicate continued demand for Descartes’ logistics, compliance, and connectivity capabilities.
Negative Factors
Slower underlying revenue growth
The sharp slowdown in TTM revenue growth indicates that Descartes’ strong margins and cash generation are currently outpacing top-line expansion. If this persists, it could limit operating leverage, reduce reinvestment returns, and make future growth more dependent on acquisitions.
Read all positive and negative factors
Positive Factors
Negative Factors
Recurring services growth
The high share of services revenue supports a recurring, software-led business model with strong customer retention potential. Double-digit services growth and improving organic momentum indicate continued demand for Descartes’ logistics, compliance, and connectivity capabilities.
Read all positive factors
The Descartes Systems Group (DSG) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$9.35B
Dividend YieldN/A
Average Volume (3M)609.09K
Price to Earnings (P/E)38.3
Beta (1Y)0.80
Revenue Growth11.62%
EPS Growth19.63%
CountryCA
Employees2,384
SectorTechnology
Sector Strength88
IndustrySoftware - Application
Share Statistics
EPS (TTM)2.06
Shares Outstanding85,690,830
10 Day Avg. Volume1,186,809
30 Day Avg. Volume609,093
Financial Highlights & Ratios
PEG Ratio2.38
Price to Book (P/B)3.99
Price to Sales (P/S)8.62
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$152.49Price Target Upside42.09% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
EPS Forecast (FY)3.21
Revenue Forecast (FY)C$1.13B
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:Jun 03, 2026
(Q1-2027)
| % Change Since: |
Next Earnings Date:Sep 10, 2026
Earnings Call Sentiment Positive
The call emphasized multiple record financial metrics (revenue, net income, adjusted EBITDA, cash generation) and a strong balance sheet, alongside active AI investments, product momentum (MacroPoint, Global Trade Intelligence, NetCHB) and strategic M&A (Idelic). Management acknowledged significant macro and geopolitical headwinds — shipping volatility from the Iran war, higher ocean rates, trucking volume declines, regulatory uncertainty, and potential quarter-to-quarter variability — but positioned the company as well-capitalized and positioned to invest and gain share. Overall, the positive operational and financial achievements substantially outweigh the highlighted external challenges.Positive Updates
Record Quarterly Revenue
Total revenues reached $193.6M, up 15% year-over-year, driven by strong services performance.
Negative Updates
Challenging Global Shipping Environment
Geopolitical disruption (Iran war) caused supply chain impacts: Strait of Hormuz effects, longer sailings, reduced schedule reliability and congestion; broader shipping volatility noted as a constraint on volumes.
Read all updates
Q1-2027 Updates
Positive
Negative
Record Quarterly Revenue
Total revenues reached $193.6M, up 15% year-over-year, driven by strong services performance.
Read all positive updates
Company Guidance
Guidance: As of May 1, 2026 (FX: CAD $0.74, EUR $1.17, GBP $1.36) Descartes calibrated Q2 baseline revenues at approximately $169.0 million, baseline operating expenses at approximately $102.0 million and a baseline adjusted EBITDA of about $66.5 million (≈39% of baseline revenues), while maintaining a target adjusted EBITDA margin range of 40%–45% (Q1 adjusted EBITDA was a record $89.8M or 46% margin). Management expects strong operating cash conversion (north of 80% of adjusted EBITDA; Q1 cash from operations $75.1M or ~84% of adjusted EBITDA), exit cash of $377M and an undrawn $350M credit line, plans incremental FY27 capex of $4M–$6M (Q1 capex ~$2.6M), and forecasts remaining-year items including amortization ~$53.5M, potential contingent consideration up to ~$9M, a tax rate of ~25%–30%, and ~ $24M of stock‑based compensation for the remainder of fiscal 2027; the NCIB permits repurchase of up to 8.6M shares (Q1 buybacks ~$21M; 196,800 additional shares bought May 1–Jun 2).The Descartes Systems Group Financial Statement Overview
Summary
Income Statement
88
Very Positive
Balance Sheet
94
Very Positive
Cash Flow
90
Very Positive
| Breakdown | TTM | Jan 2026 | Jan 2025 | Jan 2023 | Jan 2022 | Jan 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 758.57M | 743.36M | 651.00M | 572.93M | 486.01M | 424.69M |
| Gross Profit | 548.14M | 490.22M | 492.43M | 434.64M | 372.69M | 322.88M |
| EBITDA | 322.54M | 311.20M | 267.63M | 218.49M | 200.30M | 167.96M |
| Net Income | 177.13M | 167.00M | 143.27M | 115.91M | 102.24M | 86.28M |
Balance Sheet | ||||||
| Total Assets | 1.92B | 1.88B | 1.62B | 1.47B | 1.32B | 1.19B |
| Cash, Cash Equivalents and Short-Term Investments | 377.49M | 353.55M | 231.92M | 319.07M | 276.21M | 213.48M |
| Total Debt | 8.14M | 8.29M | 7.75M | 6.94M | 7.32M | 11.41M |
| Total Liabilities | 291.27M | 274.44M | 257.69M | 234.86M | 216.52M | 185.65M |
| Stockholders Equity | 1.63B | 1.61B | 1.36B | 1.23B | 1.10B | 1.00B |
Cash Flow | ||||||
| Free Cash Flow | 283.21M | 265.61M | 212.53M | 202.12M | 186.32M | 171.31M |
| Operating Cash Flow | 289.70M | 271.46M | 219.27M | 207.68M | 192.40M | 176.14M |
| Investing Cash Flow | -75.59M | -160.45M | -296.95M | -148.26M | -121.63M | -95.11M |
| Financing Cash Flow | -13.99M | 5.15M | -3.63M | -14.74M | -4.60M | 1.52M |
The Descartes Systems Group Technical Analysis
Positive
107.32
Price Trends
105.03
Positive
102.39
Positive
104.46
Positive
Market Momentum
1.55
Positive
52.18
Neutral
49.71
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 108.85, above the 50-day MA of 105.03, and above the 200-day MA of 104.46, indicating a bullish trend. The MACD of 1.55 indicates Positive momentum. The RSI at 52.18 is Neutral, neither overbought nor oversold. The STOCH value of 49.71 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 |
|---|---|---|---|---|---|---|---|
74 Outperform | C$886.80M | 12.45 | 11.97% | 7.48% | -4.08% | -7.65% | |
73 Outperform | C$9.35B | 38.29 | 11.26% | ― | 11.62% | 19.63% | |
71 Outperform | C$4.82B | 40.91 | 20.88% | ― | 15.99% | 252.03% | |
70 Outperform | C$8.02B | 5.30 | 28.29% | 4.61% | 0.54% | 54.92% | |
69 Neutral | C$856.04M | 20.76 | 113.64% | ― | 11.23% | 65.79% | |
61 Neutral | $37.18B | 12.37 | -10.20% | 1.83% | 8.50% | -7.62% | |
60 Neutral | C$1.94B | -15.01 | -6.60% | ― | 10.59% | 84.91% |
* Technology Sector Average
TSE:DSG
The Descartes Systems Group
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-26.37%
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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.