DESCARTES SYSTEMS GRP/THE (DSG.CA) Stock Fundamental Analysis
TSX:DSG - Toronto Stock Exchange - CA2499061083 - Common Stock - Currency: CAD
We assign a fundamental rating of 7 out of 10 to DSG. DSG was compared to 63 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 showing excellent growth while it is valued at reasonable prices. Keep and eye on this one! With these ratings, DSG could be worth investigating further 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.
In the past 5 years DSG has always been profitable.
Each year in the past 5 years DSG had a positive operating cash flow.
1.2 Ratios
DSG's Return On Assets of 8.70% is amongst the best of the industry. DSG outperforms 80.95% of its industry peers.
DSG's Return On Equity of 10.34% is fine compared to the rest of the industry. DSG outperforms 73.02% of its industry peers.
Looking at the Return On Invested Capital, with a value of 9.32%, DSG belongs to the top of the industry, outperforming 84.13% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for DSG is below the industry average of 12.48%.
The last Return On Invested Capital (9.32%) for DSG is above the 3 year average (8.86%), which is a sign of increasing profitability.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.7% | ||
| ROE | 10.34% | ||
| ROIC | 9.32% |
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 22.01%, DSG belongs to the best of the industry, outperforming 92.06% of the companies in the same industry.
DSG's Profit Margin has improved in the last couple of years.
DSG has a Operating Margin of 27.05%. This is amongst the best in the industry. DSG outperforms 96.83% of its industry peers.
DSG's Operating Margin has improved in the last couple of years.
DSG has a better Gross Margin (75.64%) than 79.37% of its industry peers.
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 | 27.05% | ||
| PM (TTM) | 22.01% | ||
| GM | 75.64% |
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.
DSG has more shares outstanding than it did 5 years ago.
DSG has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
2.2 Solvency
DSG has an Altman-Z score of 23.74. This indicates that DSG is financially healthy and has little risk of bankruptcy at the moment.
DSG's Altman-Z score of 23.74 is amongst the best of the industry. DSG outperforms 95.24% 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 | 23.74 |
ROIC/WACC0.94
WACC9.92%
2.3 Liquidity
A Current Ratio of 1.62 indicates that DSG should not have too much problems paying its short term obligations.
With a Current ratio value of 1.62, DSG perfoms like the industry average, outperforming 57.14% of the companies in the same industry.
A Quick Ratio of 1.62 indicates that DSG should not have too much problems paying its short term obligations.
Looking at the Quick ratio, with a value of 1.62, DSG is in line with its industry, outperforming 57.14% of the companies in the same industry.
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 | 1.62 | ||
| Quick Ratio | 1.62 |
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.
The Earnings Per Share has been growing by 30.86% on average over the past years. This is a very strong growth
Looking at the last year, DSG shows a quite strong growth in Revenue. The Revenue has grown by 13.63% in the last year.
The Revenue has been growing by 14.85% on average over the past years. This is quite good.
EPS 1Y (TTM)18.57%
EPS 3Y18.17%
EPS 5Y30.86%
EPS Q2Q%2.5%
Revenue 1Y (TTM)13.63%
Revenue growth 3Y15.3%
Revenue growth 5Y14.85%
Sales Q2Q%11.49%
3.2 Future
The Earnings Per Share is expected to grow by 22.68% on average over the next years. This is a very strong growth
DSG is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 10.68% yearly.
EPS Next Y17.47%
EPS Next 2Y29.89%
EPS Next 3Y24.79%
EPS Next 5Y22.68%
Revenue Next Year10.28%
Revenue Next 2Y11.81%
Revenue Next 3Y10.83%
Revenue Next 5Y10.68%
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.
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.
4. Valuation
4.1 Price/Earnings Ratio
DSG is valuated quite expensively with a Price/Earnings ratio of 69.64.
Based on the Price/Earnings ratio, DSG is valued a bit cheaper than 66.67% of the companies in the same industry.
DSG is valuated expensively when we compare the Price/Earnings ratio to 26.38, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 41.44, DSG can be considered very expensive at the moment.
Compared to the rest of the industry, the Price/Forward Earnings ratio of DSG indicates a somewhat cheap valuation: DSG is cheaper than 69.84% of the companies listed in the same industry.
DSG's Price/Forward Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 22.13.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 69.64 | ||
| Fwd PE | 41.44 |
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 65.08% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 46.47 | ||
| EV/EBITDA | 38.39 |
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 24.79% in the coming years.
PEG (NY)3.99
PEG (5Y)2.26
EPS Next 2Y29.89%
EPS Next 3Y24.79%
5. Dividend
5.1 Amount
DSG does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
TSX:DSG (6/4/2025, 7:00:00 PM)
158.09
+0.24 (+0.15%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners88.23%
Inst Owner ChangeN/A
Ins Owners0.26%
Ins Owner ChangeN/A
Market Cap13.53B
Analysts77.78
Price Target137.7 (-12.9%)
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)2
Avg EPS beat(2)1.66%
Min EPS beat(2)0.47%
Max EPS beat(2)2.86%
EPS beat(4)3
Avg EPS beat(4)1.1%
Min EPS beat(4)-0.16%
Max EPS beat(4)2.86%
EPS beat(8)5
Avg EPS beat(8)-1.19%
EPS beat(12)8
Avg EPS beat(12)1.72%
EPS beat(16)11
Avg EPS beat(16)3.26%
Revenue beat(2)1
Avg Revenue beat(2)-0.3%
Min Revenue beat(2)-2.69%
Max Revenue beat(2)2.1%
Revenue beat(4)2
Avg Revenue beat(4)-0.17%
Min Revenue beat(4)-2.69%
Max Revenue beat(4)2.1%
Revenue beat(8)5
Avg Revenue beat(8)-0.04%
Revenue beat(12)8
Avg Revenue beat(12)0.36%
Revenue beat(16)12
Avg Revenue beat(16)0.95%
PT rev (1m)0%
PT rev (3m)23.72%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-6.22%
EPS NY rev (1m)0%
EPS NY rev (3m)-5.08%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-1.53%
Revenue NY rev (1m)0%
Revenue NY rev (3m)-1.17%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 69.64 | ||
| Fwd PE | 41.44 | ||
| P/S | 15.17 | ||
| P/FCF | 46.47 | ||
| P/OCF | 45.04 | ||
| P/B | 7.13 | ||
| P/tB | 71.06 | ||
| EV/EBITDA | 38.39 |
EPS(TTM)2.27
EY1.44%
EPS(NY)3.81
Fwd EY2.41%
FCF(TTM)3.4
FCFY2.15%
OCF(TTM)3.51
OCFY2.22%
SpS10.42
BVpS22.17
TBVpS2.22
PEG (NY)3.99
PEG (5Y)2.26
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 8.7% | ||
| ROE | 10.34% | ||
| ROCE | 12.31% | ||
| ROIC | 9.32% | ||
| ROICexc | 11.17% | ||
| ROICexgc | N/A | ||
| OM | 27.05% | ||
| PM (TTM) | 22.01% | ||
| GM | 75.64% | ||
| FCFM | 32.65% |
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 Turnover0.4
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Debt/EBITDA | 0 | ||
| Cap/Depr | 8.99% | ||
| Cap/Sales | 1.04% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 87.33% | ||
| Profit Quality | 148.34% | ||
| Current Ratio | 1.62 | ||
| Quick Ratio | 1.62 | ||
| Altman-Z | 23.74 |
F-Score6
WACC9.92%
ROIC/WACC0.94
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 3Y24.79%
EPS Next 5Y22.68%
Revenue 1Y (TTM)13.63%
Revenue growth 3Y15.3%
Revenue growth 5Y14.85%
Sales Q2Q%11.49%
Revenue Next Year10.28%
Revenue Next 2Y11.81%
Revenue Next 3Y10.83%
Revenue Next 5Y10.68%
EBIT growth 1Y22.74%
EBIT growth 3Y19.76%
EBIT growth 5Y27.58%
EBIT Next Year72.43%
EBIT Next 3Y30.66%
EBIT Next 5Y23.89%
FCF growth 1Y5.15%
FCF growth 3Y7.45%
FCF growth 5Y16.41%
OCF growth 1Y5.58%
OCF growth 3Y7.57%
OCF growth 5Y16.02%