One-glance verdict
Undervalued
$132.17 our estimate vs market $95.99
Wall Street consensus: $102.62 (-22.4% lower than our fair-value estimate)
27% below our estimate, below the bear case
Fundamentals snapshot
The Descartes Systems Group Inc.
DSGX · NMS · Technology · Software - Application
Current price
$95.99
52-week range
$62.56 - $96.75
Market cap
$8.21B
Balance sheet
Healthy
227.93x Strong cushion
Net cash $393.51M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
1 Risk
3 rewards · 1 risks
- Reward Revenue grew 16.5% last year.
- Reward Returns 11.9% on equity, ahead of 60% of its peers.
- Reward Free cash flow was positive in 10/10 years.
- Risk Insider ownership is only 0.1% (peer median: 1.4%).
What this company does
The Descartes Systems Group Inc.
Descartes Systems Group helps companies manage their shipping and delivery operations using technology, making sure goods get where they need to go efficiently. Their money primarily comes from subscriptions for these software tools, which is great because it means they get a predictable stream of income (this predictable income from subscriptions is called recurring revenue). This helps them keep their business running smoothly and reliably for their customers.
How the company got here
The Descartes Systems Group Inc. was founded in 1981, long before the internet became a common tool for business. Initially, the company focused on creating software to help businesses manage the complexities of shipping and supply chains. A significant turning point came in 1998 when Descartes went public on the Toronto Stock Exchange, followed by a listing on the NASDAQ in 1999. However, the dot-com bubble burst in the early 2000s, and by 2004, the company was close to bankruptcy. This led to a major restructuring, including a significant workforce reduction. Under new leadership, Descartes embraced a software-as-a-service (SaaS) model, where customers pay a recurring fee to use the software over the internet, rather than buying it outright. This shift, combined with a strategy of acquiring other companies to add new capabilities, helped Descartes achieve consistent growth and financial strength.
What it actually does
Descartes provides technology solutions that help businesses manage the movement of goods, from the initial order to the final delivery. Think of it as a digital nervous system for logistics. Their software helps companies plan the most efficient routes for their delivery trucks, track shipments in real-time, manage customs paperwork for international trade, and ensure that packages are delivered on time. Essentially, they make the complex world of moving products smoother and more predictable for businesses of all sizes.
Transportation Management
This part of Descartes' business focuses on helping companies manage how their goods are transported. It includes software that allows shippers (companies that send goods), freight brokers (middlemen who arrange shipping), and third-party logistics providers (companies that handle shipping for others) to plan and track shipments. This helps them optimize the flow of goods, ensuring they get where they need to go efficiently, whether by truck, ship, or plane. It's like a central command center for all shipping activities.
Routing, Mobile, and Telematics
This segment provides tools to optimize delivery routes, making them as efficient as possible to save time and fuel. It also includes mobile applications for drivers to receive their routes, provide proof of delivery (like a signature or photo), and communicate with dispatch. Telematics refers to the technology that tracks vehicle location, performance, and driver behavior, helping to improve safety and efficiency. Imagine a smart GPS system for delivery drivers that also reports back on how the vehicle is performing.
Customs and Regulatory Compliance
When goods cross international borders, they must comply with various customs regulations and documentation requirements. This business line offers solutions that help companies navigate these complex rules, ensuring that imports and exports are processed smoothly and without delays. It involves managing customs declarations, screening for restricted parties, and ensuring compliance with trade laws. This is crucial for businesses that operate globally, preventing costly fines and shipment hold-ups.
E-commerce, Shipping, and Fulfillment
As online shopping has boomed, so has the need for efficient ways to handle e-commerce orders. This part of Descartes' business provides software to help businesses manage the entire process of fulfilling online orders. This includes everything from picking and packing items in a warehouse to shipping them to the customer and managing returns. It's designed to help online retailers scale their operations and deliver a better customer experience.
Broker and Forwarder Enterprise Systems
This segment offers specialized software for freight brokers and freight forwarders. Freight brokers connect businesses that need to ship goods with carriers (trucking companies, etc.) that can transport them. Freight forwarders manage the logistics of shipments on behalf of their clients, often consolidating smaller shipments into larger ones. The software helps these businesses manage quoting, booking shipments, tracking their progress, and handling the associated accounting and billing. It's essentially an all-in-one system for managing the day-to-day operations of these logistics intermediaries.
What management is betting on now
Descartes is focusing on integrating artificial intelligence (AI) into its existing solutions to make logistics operations even smarter and more automated. They are also continuing their strategy of acquiring companies that add new capabilities, aiming to offer a more comprehensive suite of services to their customers. By leveraging data and AI, Descartes aims to help businesses gain better control over their supply chains, reduce costs, and improve delivery times, all while navigating an increasingly complex global trade environment.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2025 Q4
$212.53M
FY2026 Q4
$260.52M
Revenue
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Net income
$163.77M
Diluted EPS
1.87
Operating cash flow
$266.25M
Free cash flow
$260.52M
Fetching…
Sources
Revenue
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Net income
$143.27M
Diluted EPS
1.64
Operating cash flow
$219.27M
Free cash flow
$212.53M
Fetching…
Sources
Is it cheap or expensive?
Fair value $132.17 vs current price $95.99
Wall Street consensus is the average analyst price target: $102.62 (-22.4% lower than our fair-value estimate).
Our most-likely fair value is $132.17 a share — about 37.7% above today's price of $95.99, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $393.5M - more cash than debt. Interest coverage 227.9x.
Net debt
$-393.51M
Interest coverage
227.93x
The Descartes Systems Group Inc.'s profit covers its interest bill about 227.9 times over. which is stronger than every peer shown here and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
DSGX
BASELINE
The Descartes Systems Group Inc.
Total debt $7.54M Interest coverage 227.93x This is the baseline the peer rows are being compared against.
Total debt $51.74M Interest coverage 64.42x -72% vs DSGX Carries about 3.5x less debt cushion than DSGX.
Total debt $1.53B Interest coverage 8.22x -96% vs DSGX Carries about 27.7x less debt cushion than DSGX.
Total debt $69.49M Interest coverage -26,288.00x -100% vs DSGX This peer has almost no interest-payment cushion compared with DSGX.
What you should know
The case for and against DSGX
3 Rewards
1 Risk
Rewards
-
Revenue grew 16.5% last year.
-
Returns 11.9% on equity, ahead of 60% of its peers.
-
Free cash flow was positive in 10/10 years.
Risks
-
Insider ownership is only 0.1% (peer median: 1.4%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
44.65x
Forward P/E
28.23x
P/B
4.99x
P/S
10.59x
EV/EBITDA
23.64x
PEG ratio
1.60x
Profitability
How much profit each dollar creates
Gross margin
77.6%
Operating margin
32.0%
Net margin
24.3%
ROE
11.9%
ROA
8.3%
Health
Liquidity and balance-sheet strength
Debt / equity
0.00x
Current ratio
2.02x
Quick ratio
1.89x
Total debt
$7.54M
Total cash
$401.06M
Growth
How the business has been compounding
Revenue TTM
$797.07M
Revenue 5Y CAGR
11.9%
EPS TTM
2.15
EPS 5Y CAGR
16.6%
Cash flow
How much cash the business throws off
Operating CF TTM
$869.34M
Free CF TTM
$260.52M
FCF margin
32.7%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
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