The Descartes Systems Group (DSG) AI Stock Analysis

• Market Cap: C$12.03B
• Dividend Yield: N/A
• Average Volume (3M): 230.45K
• Price to Earnings (P/E): 59.4
• Beta (1Y): 0.92
• Revenue Growth: 15.63%
• EPS Growth: 18.47%
• Country: CA
• Employees: 1,334
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 0.59
• Shares Outstanding: 85,782,830
• 10 Day Avg. Volume: 250,256
• 30 Day Avg. Volume: 230,446
• PEG Ratio: 2.78
• Price to Book (P/B): 7.30
• 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$161.84
• Price Target Upside: 15.37% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 8

• Rating: 78 Outperform
• Price Target: C$161.00 ▲(14.78% Upside)

Descartes Systems Group's strong financial performance and positive earnings call are the primary drivers of its high score. The company's robust profitability, minimal leverage, and excellent cash flow management position it well for future growth. Technical analysis indicates neutral momentum, while the high valuation suggests the stock is priced at a premium. The absence of a dividend yield limits immediate income potential. Overall, the company is well-positioned, but investors should be mindful of valuation and market uncertainties.

Positive Factors

Negative Factors

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 Systems Group generates revenue primarily through subscription-based software as a service (SaaS) offerings. Clients pay recurring fees for access to its logistics and supply chain management solutions, which are often tiered based on usage or features. Additionally, the company earns revenue from transaction fees associated with its electronic data interchange (EDI) and customs brokerage services, which facilitate international trade. Key partnerships with major logistics providers and integration with third-party platforms also contribute to its revenue streams, as they enhance the value of its services and expand its customer base. Furthermore, DSG invests in research and development to continually innovate and improve its product offerings, ensuring sustained growth and competitiveness in the market.

The Descartes Systems Group Financial Statement Overview

Summary

The Descartes Systems Group exhibits a robust financial position with strong profitability, minimal leverage, and excellent cash flow management. The company is well-positioned for continued growth, supported by its efficient operations and stable financial structure. Potential risks are minimal, given the low debt levels and consistent revenue growth.

Income Statement

The Descartes Systems Group demonstrates strong profitability with a consistent gross profit margin around 76% and a net profit margin exceeding 21% in TTM. Revenue growth is steady, with a 2.45% increase in the latest period, indicating a healthy upward trajectory. The EBIT and EBITDA margins are robust, reflecting efficient operational management.

Balance Sheet

The company's balance sheet is solid, characterized by a very low debt-to-equity ratio of 0.0053, indicating minimal leverage and financial risk. Return on equity is healthy at 10.41%, showcasing effective utilization of equity. The equity ratio is strong, highlighting a stable financial structure.

Cash Flow

Cash flow metrics are impressive, with a significant free cash flow growth rate of 14.34% in the TTM period. The operating cash flow to net income ratio is above 1, indicating strong cash generation relative to earnings. The free cash flow to net income ratio is nearly 1, reflecting efficient cash management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	684.78M	651.00M	572.93M	486.01M	424.69M	348.66M
Gross Profit	520.83M	492.43M	434.64M	372.69M	322.88M	258.75M
EBITDA	277.90M	267.63M	218.49M	200.30M	167.96M	133.22M
Net Income	148.19M	143.27M	115.91M	102.24M	86.28M	52.10M
Balance Sheet
Total Assets	1.76B	1.65B	1.47B	1.32B	1.19B	1.06B
Cash, Cash Equivalents and Short-Term Investments	240.63M	236.14M	320.95M	276.38M	213.44M	133.66M
Total Debt	7.97M	7.90M	6.98M	7.32M	11.41M	13.06M
Total Liabilities	256.14M	262.38M	236.25M	216.65M	185.61M	152.19M
Stockholders Equity	1.50B	1.39B	1.24B	1.10B	999.82M	911.07M
Cash Flow
Free Cash Flow	231.31M	212.53M	202.12M	186.32M	171.31M	127.47M
Operating Cash Flow	237.81M	219.27M	207.68M	192.40M	176.14M	131.23M
Investing Cash Flow	-257.60M	-296.95M	-148.26M	-121.63M	-95.11M	-52.16M
Financing Cash Flow	5.53M	-3.63M	-14.74M	-4.60M	1.52M	5.56M

The Descartes Systems Group Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 140.27
• 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 140.27 is below the 20-day moving average (MA) of 141.54, below the 50-day MA of 141.52, and below the 200-day MA of 150.72, indicating a bearish trend. The MACD of 0.22 indicates Positive momentum. The RSI at 47.49 is Neutral, neither overbought nor oversold. The STOCH value of 18.55 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	78 Outperform	C$12.03B	59.38	10.54%	―	15.63%	18.47%
ENGH	71 Outperform	1.18B	15.54	12.47%	6.15%	0.03%	-10.21%
KXS	70 Outperform	5.17B	149.22	5.61%	―	15.81%	22.17%
OTEX	70 Outperform	12.95B	22.36	11.09%	2.91%	-7.77%	-1.03%
DCBO	68 Neutral	1.19B	41.88	61.75%	―	18.51%	32.49%
LMN	62 Neutral	11.75B	91.51	-38.15%	―	29.39%	0.00%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

The Descartes Systems Group Corporate Events

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.

The most recent analyst rating on (TSE:DSG) stock is a Buy with a C$170.00 price target. To see the full list of analyst forecasts on The Descartes Systems Group stock, see the TSE:DSG Stock Forecast page.

Descartes 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.

The most recent analyst rating on (TSE:DSG) stock is a Buy with a C$170.00 price target. To see the full list of analyst forecasts on The Descartes Systems Group stock, see the TSE:DSG Stock Forecast page.