The Descartes Systems Group (DSG) is a technology company based in Canada that provides on-demand, software-as-a-service solutions to businesses.
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The company reported higher profits and revenues in its third quarter. (See Insiders’ Hot Stocks on TipRanks)
Revenues & Earnings
Revenues came in at $108.9 million for the quarter ended October 31, an increase of 24% from $87.5 million in the prior-year quarter. Services revenues were up 25% to $77.6 million year-on-year.
Net income amounted to $25.5 million ($0.30 per diluted share) in Q3 2022, an increase of 92% from $13.3 million ($0.15 per diluted share) in Q3 2021.
Adjusted EBITDA totaled $48.2 million, up 32% from $36.4 million. As a percentage of revenues, adjusted EBITDA was 44%, an improvement compared to 42% in the same period a year ago.
CEO Commentary
Descartes CEO Edward J. Ryan said, “Driver shortages, supply constraints, capacity challenges and shipping bottlenecks are just some of the factors impacting today’s global supply chains and the wider economy. Running efficient supply chains is complicated, and the right technology is key to delivering on customer promises in a secure and efficient manner. Our Global Logistics Network was specifically designed to help solve the inherent multi-party, multi-process challenges faced by supply chain participants. We continue to leverage our experience and financial position to grow our Global Logistics Network for the benefit of our customers.”
Wall Street’s Take
Following the results, RBC Capital analyst Paul Treiber kept a Buy rating on DSG and raised its price target to $100 (C$128.19). This implies 24.5% upside potential.
Overall, consensus on the Street is that DSG is a Moderate Buy based on five Buys and four Holds. The average Descartes Systems Group price target of C$116.46 implies 13.1% upside potential to current levels.
TipRanks’ Smart Score
DSG scores a 6 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock returns are likely to be in line with the overall market
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