The Descartes Systems Group (DSG) AI Stock Analysis

• Market Cap: $12.66B
• Dividend Yield: N/A
• Average Volume (3M): 148.88K
• Price to Earnings (P/E): 65.5
• Beta (1Y): 0.92
• Revenue Growth: 16.07%
• EPS Growth: 25.71%
• Country: CA
• Employees: 1,334
• Sector: Technology
• Sector Strength: 66
• Industry: Software - Application
• EPS (TTM): 0.61
• Shares Outstanding: 85,390,144
• 10 Day Avg. Volume: 110,520
• 30 Day Avg. Volume: 148,878
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.14
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 33.14
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $170.68
• Price Target Upside: 12.78% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

Descartes Systems Group demonstrates robust financial performance and strategic growth initiatives. The company benefits from strong revenue and profit growth, efficient cash flow management, and low leverage. While technical indicators show mixed signals and the stock might be overvalued, the strong earnings call underlines the company's resilience and strategic focus amidst market uncertainties. These factors contribute to a favorable overall score.

Positive Factors

Acquisition Strategy

The acquisition of 3GTMS strengthens Descartes’s presence in North America and enhances its transportation management offerings.

Financial Performance

Descartes reported a solid fourth quarter with services revenue and adjusted EBITDA growing 15% and 14%, respectively.

Negative Factors

Tariff Uncertainty

Tariff uncertainty might weigh on shipping volumes and organic growth, which may in turn constrain the stock's multiple.

Valuation Concern

There is a struggle with the stock's significant valuation premium relative to other software consolidators.

The Descartes Systems Group Business Overview & Revenue Model

Company Description

The Descartes Systems Group (DSG) is a global leader in providing cloud-based logistics and supply chain management solutions. Headquartered in Waterloo, Ontario, Canada, the company operates in the technology and logistics sectors, offering a comprehensive suite of software solutions designed to enhance productivity, security, and operational efficiency for businesses across various industries. Descartes' core products include transportation management systems, route optimization, global trade compliance, and e-commerce fulfillment solutions, catering to a diverse range of customers worldwide.

How the Company Makes Money

The Descartes Systems Group primarily generates revenue through a subscription-based model for its cloud-based logistics software solutions. The company's key revenue streams include recurring subscription fees from its software-as-a-service (SaaS) offerings, professional services for implementation and customization, and ongoing customer support and maintenance contracts. Additionally, Descartes benefits from strategic partnerships and collaborations with technology providers, logistics companies, and industry associations, which enhance their service offerings and expand their market reach. These partnerships, along with a focus on innovation and customer-centric solutions, contribute to Descartes' sustained financial performance and growth.

The Descartes Systems Group Financial Statement Overview

Summary

The Descartes Systems Group exhibits strong financial health, with impressive revenue and profit growth, robust margins, and efficient cash flow management. The company's low leverage and high equity ratio enhance its financial stability, positioning it well for future growth and resilience against potential economic fluctuations.

Income Statement

The Descartes Systems Group has demonstrated strong revenue growth with a Revenue Growth Rate of approximately 13.62% from 2024 to 2025. The Gross Profit Margin is robust at 75.63%, indicating efficient cost management. The Net Profit Margin stands at 22.00%, reflecting strong profitability. The EBIT Margin of 27.83% and EBITDA Margin of 40.48% further highlight the company's operational efficiency and profitability.

Balance Sheet

The company maintains a solid financial position with a low Debt-to-Equity Ratio of 0.01, indicating low leverage and financial stability. The Return on Equity (ROE) is strong at 10.34%, showing effective use of shareholder funds. The Equity Ratio is high at 84.08%, suggesting a strong capital structure with significant equity financing.

Cash Flow

Operating Cash Flow increased to $219 million, showing strong cash generation. The Free Cash Flow Growth Rate is 5.15%, indicating positive cash flow trajectory. The Operating Cash Flow to Net Income Ratio of 1.53 and Free Cash Flow to Net Income Ratio of 1.48 suggest efficient conversion of profits into cash, supporting financial flexibility.

Breakdown
Mar 2024	Mar 2023	Mar 2022	Mar 2021	Mar 2020
Income Statement		Total Revenue
572.93M	486.01M	424.69M	348.66M	325.79M
	Gross Profit
434.64M	372.69M	322.88M	258.75M	240.07M
	EBIT
164.50M	130.43M	103.43M	71.40M	52.26M
	EBITDA
218.49M	200.30M	167.96M	133.22M	113.97M
	Net Income Common Stockholders
115.91M	102.24M	86.28M	52.10M	37.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
320.95M	276.38M	213.44M	133.66M	44.40M
	Total Assets
1.47B	1.32B	1.19B	1.06B	942.59M
	Total Debt
6.98M	7.32M	11.41M	13.06M	13.40M
	Net Debt
-313.97M	-269.06M	-202.03M	-120.60M	-31.00M
	Total Liabilities
236.25M	216.65M	185.61M	152.19M	120.88M
	Stockholders Equity
1.24B	1.10B	999.82M	911.07M	821.71M
Cash Flow		Free Cash Flow
202.12M	186.32M	171.31M	127.47M	99.35M
	Operating Cash Flow
207.68M	192.40M	176.14M	131.23M	104.25M
	Investing Cash Flow
-148.26M	-121.63M	-95.11M	-52.16M	-296.95M
	Financing Cash Flow
-14.74M	-4.60M	1.52M	5.56M	210.17M

The Descartes Systems Group Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 151.34
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 151.34 is above the 20-day moving average (MA) of 144.72, above the 50-day MA of 145.44, and above the 200-day MA of 150.39, indicating a bullish trend. The MACD of 1.17 indicates Negative momentum. The RSI at 61.12 is Neutral, neither overbought nor oversold. The STOCH value of 84.71 is Negative, 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

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DSG	80 Outperform	$12.66B	65.52	10.92%	―	16.07%	25.71%
DCBO	77 Outperform	$1.31B	35.70	49.29%	―	21.78%	868.71%
ENGH	74 Outperform	$1.42B	16.48	14.76%	4.09%	8.11%	15.83%
OTEX	74 Outperform	$9.53B	10.89	15.87%	3.85%	-8.74%	307.82%
KXS	71 Outperform	C$5.28B	157.81	2.32%	―	15.14%	-31.45%
LMN	70 Outperform	C$11.72B	126.27	9.89%	―	35.90%	97.74%
Sector *	60 Neutral	$10.83B	10.47	-6.71%	2.99%	7.73%	-12.97%

The Descartes Systems Group Corporate Events

Descartes Systems Group to Announce Q1 Fiscal 2026 Results

Descartes Systems Group has announced that it will release its first quarter fiscal 2026 financial results on June 4, 2025, after the market closes. The company will host a conference call to discuss these results, providing stakeholders with insights into its financial performance. This announcement is significant for stakeholders as it provides an opportunity to assess the company’s financial health and strategic direction in the logistics software industry.

Spark’s Take on TSE:DSG Stock

According to Spark, TipRanks’ AI Analyst, TSE:DSG is a Outperform.

Descartes Systems Group demonstrates robust financial performance and strategic growth initiatives. The company benefits from strong revenue and profit growth, efficient cash flow management, and low leverage. While technical indicators show mixed signals and the stock might be overvalued, the strong earnings call underlines the company’s resilience and strategic focus amidst market uncertainties. These factors contribute to a favorable overall score.

To see Spark’s full report on TSE:DSG stock, click here.

Descartes Enhances Air Messaging Solution with IATA’s ONE Record Standard

Descartes Systems Group has enhanced its Descartes Air Messaging™ solution to align with IATA’s ONE Record messaging standard, which aims to digitize air cargo messaging services by 2026. This advancement is expected to improve transparency, efficiency, and speed in air cargo operations, benefiting stakeholders by streamlining processes and reducing costs. The initiative is supported by Lufthansa Cargo, which sees it as a crucial step in providing customers with real-time data-sharing capabilities, thereby enhancing the customer experience in air cargo operations.

Spark’s Take on TSE:DSG Stock

According to Spark, TipRanks’ AI Analyst, TSE:DSG is a Outperform.

Descartes Systems Group demonstrates strong financial performance and resilience, with robust revenue growth and efficient cash flow management. The company’s strategic focus and successful acquisitions bolster its position in the software industry. Technical indicators suggest a bearish trend, and the high P/E ratio indicates overvaluation. Overall, the company’s solid financial foundation and strategic initiatives drive a favorable outlook despite valuation concerns.

To see Spark’s full report on TSE:DSG stock, click here.

Lane One Transport Enhances Operations with Descartes and Parade AI Solutions

The Descartes Systems Group announced that Lane One Transport, a Texas-based freight brokerage leader, is automating its carrier communication and qualification processes using Parade CoDriver, an AI-powered solution integrated with Descartes’ Aljex transportation management system and MyCarrierPortal. This integration allows Lane One to enhance load coverage, gain pricing insights, and reduce carrier fraud risk by automating traditionally manual processes, thus improving operational efficiency and decision-making in carrier engagement.

Skypace Boosts Freight Booking Efficiency with Descartes Solution

Descartes Systems Group announced that Skypace, an international freight forwarder, is utilizing the Descartes Global Price Management solution to enhance its quote-to-book platform with accurate shipping rates, significantly improving the speed and accuracy of freight bookings. This integration has reduced rate processing times by 85% and increased pricing accuracy, leading to enhanced customer satisfaction and operational efficiencies. The solution allows Skypace to process over 20,000 freight quotes per hour, providing real-time rate visibility and transforming traditional processes into a seamless digital experience.

Skypace Boosts Freight Booking Efficiency with Descartes Solution

Descartes Systems Group announced that Skypace, an international freight forwarder, is utilizing the Descartes Global Price Management solution to enhance the speed and accuracy of its freight bookings. This integration has significantly reduced rate processing times by 85% and improved pricing accuracy, leading to increased customer satisfaction and operational efficiency. The solution enables Skypace to process over 20,000 freight quotes per hour, providing real-time rate visibility and transforming traditional rate management processes.

Descartes Study: Trade Compliance as a Competitive Edge for High-Growth Companies

Descartes Systems Group has released a study highlighting that 39% of high-growth companies view trade compliance as a competitive advantage rather than just a regulatory requirement. The study underscores the importance of technology in trade compliance strategies, with 72% of fast-growing companies considering it a key competitive differentiator. Additionally, these companies are investing in building well-resourced compliance teams to navigate the volatile trade landscape effectively, thereby turning compliance into a growth engine and enhancing supply chain resilience.

Descartes Systems Group Reports Strong Fiscal 2025 Results

The Descartes Systems Group reported strong financial results for fiscal 2025, with a 14% increase in revenues to $651 million and a 27% rise in income from operations to $181.1 million. The company attributes its growth to strategic investments in complementary services, which have enhanced its Global Logistics Network, aiding clients in navigating the evolving global trade environment. These results underscore Descartes’ robust market positioning and its ability to deliver value to stakeholders amid increasing trade complexities.

Defense Trade Solutions Enhances Compliance with Descartes’ GlobalEASE

Defense Trade Solutions (DTS) has adopted Descartes’ GlobalEASE solution to streamline export compliance for the defense industry, enhancing efficiency and reducing costs. This integration allows DTS to better navigate complex regulations like ITAR and EAR, improving compliance workflows and minimizing risks, which is crucial given the current geopolitical and regulatory challenges.

Descartes Enhances Shipment Visibility for American Lamprecht

Descartes Systems Group has announced that American Lamprecht, a freight forwarder based in Illinois, is now offering its customers real-time visibility for air and ocean shipments via Descartes’ advanced tracking capabilities. This integration, part of the Descartes Global Logistics Network, allows for improved decision-making and risk management by providing real-time updates and predictive ETAs. The move is expected to enhance operational efficiency and customer service for American Lamprecht, positioning them to better meet customer expectations and streamline logistics workflows.