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DESCARTES SYSTEMS GRP/THE (DSG.CA) Stock Fundamental Analysis

TSX:DSG - Toronto Stock Exchange - CA2499061083 - Common Stock - Currency: CAD

165.19  -0.52 (-0.31%)

Fundamental Rating

7

We assign a fundamental rating of 7 out of 10 to DSG. DSG was compared to 66 industry peers in the Software industry. DSG gets an excellent profitability rating and is at the same time showing great financial health properties. DSG is not overvalued while it is showing excellent growth. This is an interesting combination. This makes DSG very considerable for growth and quality investing!


Dividend Valuation Growth Profitability Health

8

1. Profitability

1.1 Basic Checks

DSG had positive earnings in the past year.
DSG had a positive operating cash flow in the past year.
DSG had positive earnings in 4 of the past 5 years.
Of the past 5 years DSG 4 years had a positive operating cash flow.
DSG.CA Yearly Net Income VS EBIT VS OCF VS FCFDSG.CA Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 50M 100M 150M 200M

1.2 Ratios

With an excellent Return On Assets value of 8.51%, DSG belongs to the best of the industry, outperforming 81.82% of the companies in the same industry.
DSG has a better Return On Equity (10.16%) than 77.27% of its industry peers.
The Return On Invested Capital of DSG (9.11%) is better than 80.30% of its industry peers.
DSG had an Average Return On Invested Capital over the past 3 years of 8.30%. This is below the industry average of 12.24%.
The 3 year average ROIC (8.30%) for DSG is below the current ROIC(9.11%), indicating increased profibility in the last year.
Industry RankSector Rank
ROA 8.51%
ROE 10.16%
ROIC 9.11%
ROA(3y)7.64%
ROA(5y)6.35%
ROE(3y)9.1%
ROE(5y)7.5%
ROIC(3y)8.3%
ROIC(5y)7.07%
DSG.CA Yearly ROA, ROE, ROICDSG.CA Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2 4 6 8

1.3 Margins

DSG's Profit Margin of 21.80% is amongst the best of the industry. DSG outperforms 92.42% of its industry peers.
In the last couple of years the Profit Margin of DSG has grown nicely.
DSG has a Operating Margin of 26.37%. This is amongst the best in the industry. DSG outperforms 95.45% of its industry peers.
DSG's Operating Margin has improved in the last couple of years.
DSG has a better Gross Margin (75.43%) than 80.30% of its industry peers.
DSG's Gross Margin has been stable in the last couple of years.
Industry RankSector Rank
OM 26.37%
PM (TTM) 21.8%
GM 75.43%
OM growth 3Y6.52%
OM growth 5Y8.82%
PM growth 3Y10.63%
PM growth 5Y12.21%
GM growth 3Y0.73%
GM growth 5Y0.84%
DSG.CA Yearly Profit, Operating, Gross MarginsDSG.CA Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20 40 60

8

2. Health

2.1 Basic Checks

DSG has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
There is no outstanding debt for DSG. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
DSG.CA Yearly Shares OutstandingDSG.CA Yearly Shares OutstandingYearly Shares Outstanding 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20M 40M 60M 80M
DSG.CA Yearly Total Debt VS Total AssetsDSG.CA Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 500M 1B

2.2 Solvency

An Altman-Z score of 23.81 indicates that DSG is not in any danger for bankruptcy at the moment.
With an excellent Altman-Z score value of 23.81, DSG belongs to the best of the industry, outperforming 95.45% of the companies in the same industry.
DSG has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
Industry RankSector Rank
Debt/Equity 0
Debt/FCF 0
Altman-Z 23.81
ROIC/WACC0.72
WACC12.73%
DSG.CA Yearly LT Debt VS Equity VS FCFDSG.CA Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 200M 400M 600M 800M 1B

2.3 Liquidity

DSG has a Current Ratio of 1.34. This is a normal value and indicates that DSG is financially healthy and should not expect problems in meeting its short term obligations.
Looking at the Current ratio, with a value of 1.34, DSG is in line with its industry, outperforming 54.55% of the companies in the same industry.
DSG has a Quick Ratio of 1.34. This is a normal value and indicates that DSG is financially healthy and should not expect problems in meeting its short term obligations.
DSG's Quick ratio of 1.34 is in line compared to the rest of the industry. DSG outperforms 54.55% of its industry peers.
The current and quick ratio evaluation for DSG is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
Industry RankSector Rank
Current Ratio 1.34
Quick Ratio 1.34
DSG.CA Yearly Current Assets VS Current LiabilitesDSG.CA Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 100M 200M 300M 400M

8

3. Growth

3.1 Past

DSG shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 21.37%, which is quite impressive.
DSG shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 27.35% yearly.
DSG shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 14.90%.
Measured over the past years, DSG shows a quite strong growth in Revenue. The Revenue has been growing by 15.80% on average per year.
EPS 1Y (TTM)21.37%
EPS 3Y30.71%
EPS 5Y27.35%
EPS Q2Q%35.48%
Revenue 1Y (TTM)14.9%
Revenue growth 3Y18%
Revenue growth 5Y15.8%
Sales Q2Q%16.62%

3.2 Future

The Earnings Per Share is expected to grow by 24.26% on average over the next years. This is a very strong growth
The Revenue is expected to grow by 11.40% on average over the next years. This is quite good.
EPS Next Y27.15%
EPS Next 2Y23.44%
EPS Next 3Y27.6%
EPS Next 5Y24.26%
Revenue Next Year14.44%
Revenue Next 2Y12.92%
Revenue Next 3Y12.68%
Revenue Next 5Y11.4%

3.3 Evolution

The EPS growth rate is stable: in the next years the growth will be about the same than in the last years.
Although the future Revenue growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
DSG.CA Yearly Revenue VS EstimatesDSG.CA Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 500M 1B
DSG.CA Yearly EPS VS EstimatesDSG.CA Yearly EPS VS EstimatesYearly EPS VS Estimates 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2 4 6

4

4. Valuation

4.1 Price/Earnings Ratio

DSG is valuated quite expensively with a Price/Earnings ratio of 73.09.
DSG's Price/Earnings ratio is a bit cheaper when compared to the industry. DSG is cheaper than 66.67% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 30.19. DSG is valued rather expensively when compared to this.
Based on the Price/Forward Earnings ratio of 57.01, the valuation of DSG can be described as expensive.
71.21% of the companies in the same industry are more expensive than DSG, based on the Price/Forward Earnings ratio.
DSG is valuated expensively when we compare the Price/Forward Earnings ratio to 23.58, which is the current average of the S&P500 Index.
Industry RankSector Rank
PE 73.09
Fwd PE 57.01
DSG.CA Price Earnings VS Forward Price EarningsDSG.CA Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 20 40 60

4.2 Price Multiples

The rest of the industry has a similar Enterprise Value to EBITDA ratio as DSG.
Based on the Price/Free Cash Flow ratio, DSG is valued a bit cheaper than the industry average as 63.64% of the companies are valued more expensively.
Industry RankSector Rank
P/FCF 48.87
EV/EBITDA 41.25
DSG.CA Per share dataDSG.CA EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 5 10 15 20

4.3 Compensation for Growth

The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates DSG does not grow enough to justify the current Price/Earnings ratio.
DSG has an outstanding profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as DSG's earnings are expected to grow with 27.60% in the coming years.
PEG (NY)2.69
PEG (5Y)2.67
EPS Next 2Y23.44%
EPS Next 3Y27.6%

0

5. Dividend

5.1 Amount

No dividends for DSG!.
Industry RankSector Rank
Dividend Yield N/A

DESCARTES SYSTEMS GRP/THE

TSX:DSG (2/14/2025, 7:00:00 PM)

165.19

-0.52 (-0.31%)

Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)12-03 2024-12-03/amc
Earnings (Next)03-05 2025-03-05/amc
Inst Owners87.2%
Inst Owner ChangeN/A
Ins Owners0.27%
Ins Owner ChangeN/A
Market Cap14.14B
Analysts77.78
Price Target111.3 (-32.62%)
Short Float %N/A
Short RatioN/A
Dividend
Industry RankSector Rank
Dividend Yield N/A
Yearly DividendN/A
Dividend Growth(5Y)N/A
DPN/A
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)1
Avg EPS beat(2)1.35%
Min EPS beat(2)-0.16%
Max EPS beat(2)2.86%
EPS beat(4)3
Avg EPS beat(4)0.99%
Min EPS beat(4)-0.16%
Max EPS beat(4)2.86%
EPS beat(8)5
Avg EPS beat(8)0.6%
EPS beat(12)7
Avg EPS beat(12)0.83%
EPS beat(16)11
Avg EPS beat(16)4.61%
Revenue beat(2)2
Avg Revenue beat(2)1.55%
Min Revenue beat(2)1%
Max Revenue beat(2)2.1%
Revenue beat(4)3
Avg Revenue beat(4)0.98%
Min Revenue beat(4)-1.11%
Max Revenue beat(4)2.1%
Revenue beat(8)6
Avg Revenue beat(8)0.34%
Revenue beat(12)9
Avg Revenue beat(12)0.72%
Revenue beat(16)13
Avg Revenue beat(16)1.32%
PT rev (1m)0%
PT rev (3m)3.15%
EPS NQ rev (1m)-2.1%
EPS NQ rev (3m)-6.13%
EPS NY rev (1m)0.08%
EPS NY rev (3m)2%
Revenue NQ rev (1m)2.5%
Revenue NQ rev (3m)4.26%
Revenue NY rev (1m)0%
Revenue NY rev (3m)1.4%
Valuation
Industry RankSector Rank
PE 73.09
Fwd PE 57.01
P/S 15.78
P/FCF 48.87
P/OCF 47.61
P/B 7.35
P/tB 129.41
EV/EBITDA 41.25
EPS(TTM)2.26
EY1.37%
EPS(NY)2.9
Fwd EY1.75%
FCF(TTM)3.38
FCFY2.05%
OCF(TTM)3.47
OCFY2.1%
SpS10.47
BVpS22.48
TBVpS1.28
PEG (NY)2.69
PEG (5Y)2.67
Profitability
Industry RankSector Rank
ROA 8.51%
ROE 10.16%
ROCE 11.9%
ROIC 9.11%
ROICexc 10.46%
ROICexgc N/A
OM 26.37%
PM (TTM) 21.8%
GM 75.43%
FCFM 32.28%
ROA(3y)7.64%
ROA(5y)6.35%
ROE(3y)9.1%
ROE(5y)7.5%
ROIC(3y)8.3%
ROIC(5y)7.07%
ROICexc(3y)10.84%
ROICexc(5y)8.83%
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)10.85%
ROCE(5y)9.24%
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3Y19.94%
ROICexc growth 5Y13.19%
OM growth 3Y6.52%
OM growth 5Y8.82%
PM growth 3Y10.63%
PM growth 5Y12.21%
GM growth 3Y0.73%
GM growth 5Y0.84%
F-Score6
Asset Turnover0.39
Health
Industry RankSector Rank
Debt/Equity 0
Debt/FCF 0
Debt/EBITDA 0
Cap/Depr 7.61%
Cap/Sales 0.85%
Interest Coverage 250
Cash Conversion 88.25%
Profit Quality 148.06%
Current Ratio 1.34
Quick Ratio 1.34
Altman-Z 23.81
F-Score6
WACC12.73%
ROIC/WACC0.72
Cap/Depr(3y)8.41%
Cap/Depr(5y)7.87%
Cap/Sales(3y)1.12%
Cap/Sales(5y)1.19%
Profit Quality(3y)185.06%
Profit Quality(5y)213.67%
High Growth Momentum
Growth
EPS 1Y (TTM)21.37%
EPS 3Y30.71%
EPS 5Y27.35%
EPS Q2Q%35.48%
EPS Next Y27.15%
EPS Next 2Y23.44%
EPS Next 3Y27.6%
EPS Next 5Y24.26%
Revenue 1Y (TTM)14.9%
Revenue growth 3Y18%
Revenue growth 5Y15.8%
Sales Q2Q%16.62%
Revenue Next Year14.44%
Revenue Next 2Y12.92%
Revenue Next 3Y12.68%
Revenue Next 5Y11.4%
EBIT growth 1Y17.47%
EBIT growth 3Y25.69%
EBIT growth 5Y26%
EBIT Next Year97.22%
EBIT Next 3Y37.65%
EBIT Next 5Y27.97%
FCF growth 1Y12.14%
FCF growth 3Y16.63%
FCF growth 5Y22.62%
OCF growth 1Y11.77%
OCF growth 3Y16.54%
OCF growth 5Y21.6%