DESCARTES SYSTEMS GRP/THE (DSG.CA) Stock Fundamental Analysis
TSX:DSG - Toronto Stock Exchange - CA2499061083 - Common Stock - Currency: CAD
Overall DSG gets a fundamental rating of 7 out of 10. We evaluated DSG against 62 industry peers in the Software industry. DSG has outstanding health and profitabily ratings, belonging to the best of the industry. This is a solid base for any company. DSG is not overvalued while it is showing excellent growth. This is an interesting combination. These ratings would make DSG suitable for growth and quality investing!
1. Profitability
1.1 Basic Checks
DSG had positive earnings in the past year.
In the past year DSG had a positive cash flow from operations.
DSG had positive earnings in each of the past 5 years.
DSG had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
The Return On Assets of DSG (8.47%) is better than 80.65% of its industry peers.
The Return On Equity of DSG (9.98%) is better than 74.19% of its industry peers.
DSG has a better Return On Invested Capital (9.06%) than 82.26% of its industry peers.
DSG had an Average Return On Invested Capital over the past 3 years of 8.86%. This is below the industry average of 12.52%.
The 3 year average ROIC (8.86%) for DSG is below the current ROIC(9.06%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.47% | ||
| ROE | 9.98% | ||
| ROIC | 9.06% |
ROA(3y)8.11%
ROA(5y)7.3%
ROE(3y)9.67%
ROE(5y)8.67%
ROIC(3y)8.86%
ROIC(5y)7.93%
1.3 Margins
With an excellent Profit Margin value of 21.67%, DSG belongs to the best of the industry, outperforming 93.55% of the companies in the same industry.
DSG's Profit Margin has improved in the last couple of years.
With an excellent Operating Margin value of 26.69%, DSG belongs to the best of the industry, outperforming 96.77% of the companies in the same industry.
DSG's Operating Margin has improved in the last couple of years.
Looking at the Gross Margin, with a value of 75.63%, DSG belongs to the top of the industry, outperforming 82.26% of the companies in the same industry.
In the last couple of years the Gross Margin of DSG has remained more or less at the same level.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 26.69% | ||
| PM (TTM) | 21.67% | ||
| GM | 75.63% |
OM growth 3Y3.87%
OM growth 5Y11.08%
PM growth 3Y2.7%
PM growth 5Y14.15%
GM growth 3Y-0.17%
GM growth 5Y0.52%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so DSG is destroying value.
The number of shares outstanding for DSG has been increased compared to 1 year ago.
Compared to 5 years ago, DSG has more shares outstanding
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.
2.2 Solvency
An Altman-Z score of 21.58 indicates that DSG is not in any danger for bankruptcy at the moment.
The Altman-Z score of DSG (21.58) is better than 93.55% of its industry peers.
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.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Altman-Z | 21.58 |
ROIC/WACC0.93
WACC9.7%
2.3 Liquidity
DSG has a Current Ratio of 1.35. This is a normal value and indicates that DSG is financially healthy and should not expect problems in meeting its short term obligations.
DSG has a Current ratio of 1.35. This is comparable to the rest of the industry: DSG outperforms 53.23% of its industry peers.
A Quick Ratio of 1.35 indicates that DSG should not have too much problems paying its short term obligations.
DSG's Quick ratio of 1.35 is in line compared to the rest of the industry. DSG outperforms 53.23% of its industry peers.
DSG does not score too well on the current and quick ratio evaluation. However, as it has excellent solvency and profitability, these ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.35 | ||
| Quick Ratio | 1.35 |
3. Growth
3.1 Past
DSG shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 18.57%, which is quite good.
DSG shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 30.86% yearly.
The Revenue has grown by 13.74% in the past year. This is quite good.
Measured over the past years, DSG shows a quite strong growth in Revenue. The Revenue has been growing by 14.85% on average per year.
EPS 1Y (TTM)18.57%
EPS 3Y18.17%
EPS 5Y30.86%
EPS Q2Q%2.5%
Revenue 1Y (TTM)13.74%
Revenue growth 3Y15.3%
Revenue growth 5Y14.85%
Sales Q2Q%11.49%
3.2 Future
The Earnings Per Share is expected to grow by 21.86% on average over the next years. This is a very strong growth
Based on estimates for the next years, DSG will show a quite strong growth in Revenue. The Revenue will grow by 10.56% on average per year.
EPS Next Y17.47%
EPS Next 2Y29.89%
EPS Next 3Y23.99%
EPS Next 5Y21.86%
Revenue Next Year9.21%
Revenue Next 2Y11.81%
Revenue Next 3Y10.67%
Revenue Next 5Y10.56%
3.3 Evolution
Although the future EPS growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.
The estimated forward Revenue growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 61.08, DSG can be considered very expensive at the moment.
Based on the Price/Earnings ratio, DSG is valued a bit cheaper than the industry average as 67.74% of the companies are valued more expensively.
The average S&P500 Price/Earnings ratio is at 26.48. DSG is valued rather expensively when compared to this.
A Price/Forward Earnings ratio of 36.40 indicates a quite expensive valuation of DSG.
DSG's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. DSG is cheaper than 72.58% of the companies in the same industry.
DSG's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 34.04.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 61.08 | ||
| Fwd PE | 36.4 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, DSG is valued a bit cheaper than the industry average as 61.29% of the companies are valued more expensively.
Based on the Price/Free Cash Flow ratio, DSG is valued a bit cheaper than the industry average as 66.13% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 42.97 | ||
| EV/EBITDA | 33.47 |
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.
DSG's earnings are expected to grow with 23.99% in the coming years. This may justify a more expensive valuation.
PEG (NY)3.5
PEG (5Y)1.98
EPS Next 2Y29.89%
EPS Next 3Y23.99%
5. Dividend
5.1 Amount
DSG does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
TSX:DSG (8/8/2025, 7:00:00 PM)
139.26
-1.67 (-1.18%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners86.14%
Inst Owner ChangeN/A
Ins Owners0.26%
Ins Owner ChangeN/A
Market Cap11.95B
Analysts77.78
Price Target137.7 (-1.12%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector 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)-3.18%
Min EPS beat(2)-6.83%
Max EPS beat(2)0.47%
EPS beat(4)2
Avg EPS beat(4)-0.92%
Min EPS beat(4)-6.83%
Max EPS beat(4)2.86%
EPS beat(8)4
Avg EPS beat(8)-2.15%
EPS beat(12)7
Avg EPS beat(12)0.77%
EPS beat(16)10
Avg EPS beat(16)1.28%
Revenue beat(2)0
Avg Revenue beat(2)-2.23%
Min Revenue beat(2)-2.69%
Max Revenue beat(2)-1.77%
Revenue beat(4)2
Avg Revenue beat(4)-0.34%
Min Revenue beat(4)-2.69%
Max Revenue beat(4)2.1%
Revenue beat(8)4
Avg Revenue beat(8)-0.29%
Revenue beat(12)7
Avg Revenue beat(12)0.11%
Revenue beat(16)11
Avg Revenue beat(16)0.45%
PT rev (1m)0%
PT rev (3m)0%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-7.71%
EPS NY rev (1m)0%
EPS NY rev (3m)0%
Revenue NQ rev (1m)-0.25%
Revenue NQ rev (3m)-1.58%
Revenue NY rev (1m)-0.97%
Revenue NY rev (3m)-0.97%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 61.08 | ||
| Fwd PE | 36.4 | ||
| P/S | 13 | ||
| P/FCF | 42.97 | ||
| P/OCF | 41.56 | ||
| P/B | 5.99 | ||
| P/tB | 94.94 | ||
| EV/EBITDA | 33.47 |
EPS(TTM)2.28
EY1.64%
EPS(NY)3.83
Fwd EY2.75%
FCF(TTM)3.24
FCFY2.33%
OCF(TTM)3.35
OCFY2.41%
SpS10.71
BVpS23.26
TBVpS1.47
PEG (NY)3.5
PEG (5Y)1.98
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.47% | ||
| ROE | 9.98% | ||
| ROCE | 11.96% | ||
| ROIC | 9.06% | ||
| ROICexc | 10.27% | ||
| ROICexgc | N/A | ||
| OM | 26.69% | ||
| PM (TTM) | 21.67% | ||
| GM | 75.63% | ||
| FCFM | 30.27% |
ROA(3y)8.11%
ROA(5y)7.3%
ROE(3y)9.67%
ROE(5y)8.67%
ROIC(3y)8.86%
ROIC(5y)7.93%
ROICexc(3y)11.36%
ROICexc(5y)9.99%
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)11.7%
ROCE(5y)10.48%
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3Y6.45%
ROICexc growth 5Y18.03%
OM growth 3Y3.87%
OM growth 5Y11.08%
PM growth 3Y2.7%
PM growth 5Y14.15%
GM growth 3Y-0.17%
GM growth 5Y0.52%
F-Score6
Asset Turnover0.39
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Debt/EBITDA | 0 | ||
| Cap/Depr | 8.64% | ||
| Cap/Sales | 1.02% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 81.2% | ||
| Profit Quality | 139.66% | ||
| Current Ratio | 1.35 | ||
| Quick Ratio | 1.35 | ||
| Altman-Z | 21.58 |
F-Score6
WACC9.7%
ROIC/WACC0.93
Cap/Depr(3y)8.9%
Cap/Depr(5y)8.08%
Cap/Sales(3y)1.09%
Cap/Sales(5y)1.1%
Profit Quality(3y)168.32%
Profit Quality(5y)189.61%
High Growth Momentum
Growth
EPS 1Y (TTM)18.57%
EPS 3Y18.17%
EPS 5Y30.86%
EPS Q2Q%2.5%
EPS Next Y17.47%
EPS Next 2Y29.89%
EPS Next 3Y23.99%
EPS Next 5Y21.86%
Revenue 1Y (TTM)13.74%
Revenue growth 3Y15.3%
Revenue growth 5Y14.85%
Sales Q2Q%11.49%
Revenue Next Year9.21%
Revenue Next 2Y11.81%
Revenue Next 3Y10.67%
Revenue Next 5Y10.56%
EBIT growth 1Y22.43%
EBIT growth 3Y19.76%
EBIT growth 5Y27.58%
EBIT Next Year72.43%
EBIT Next 3Y30.11%
EBIT Next 5Y23.13%
FCF growth 1Y5.81%
FCF growth 3Y7.45%
FCF growth 5Y16.41%
OCF growth 1Y6.26%
OCF growth 3Y7.57%
OCF growth 5Y16.02%