DESCARTES SYSTEMS GRP/THE (DSG.CA) Stock Fundamental Analysis
TSX:DSG - Toronto Stock Exchange - CA2499061083 - Common Stock - Currency: CAD
DSG gets a fundamental rating of 7 out of 10. The analysis compared the fundamentals against 66 industry peers in the Software industry. Both the health and profitability get an excellent rating, making DSG a very profitable company, without any liquidiy or solvency issues. 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
In the past year DSG was profitable.
In the past year DSG had a positive cash flow from operations.
DSG had positive earnings in 4 of the past 5 years.
DSG had a positive operating cash flow in 4 of the past 5 years.
1.2 Ratios
The Return On Assets of DSG (8.51%) is better than 83.33% of its industry peers.
The Return On Equity of DSG (10.16%) is better than 78.79% of its industry peers.
The Return On Invested Capital of DSG (9.11%) is better than 81.82% of its industry peers.
The Average Return On Invested Capital over the past 3 years for DSG is below the industry average of 11.84%.
The last Return On Invested Capital (9.11%) for DSG is above the 3 year average (8.30%), which is a sign of increasing profitability.
| Industry Rank | Sector 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%
1.3 Margins
DSG has a better Profit Margin (21.80%) than 93.94% of its industry peers.
In the last couple of years the Profit Margin of DSG has grown nicely.
The Operating Margin of DSG (26.37%) is better than 96.97% of its industry peers.
In the last couple of years the Operating Margin of DSG has grown nicely.
DSG's Gross Margin of 75.43% is fine compared to the rest of the industry. DSG outperforms 78.79% 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 | 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%
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.
2.2 Solvency
DSG has an Altman-Z score of 24.15. This indicates that DSG is financially healthy and has little risk of bankruptcy at the moment.
DSG has a better Altman-Z score (24.15) than 95.45% of its industry peers.
DSG has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0 | ||
| Debt/FCF | 0 | ||
| Altman-Z | 24.15 |
ROIC/WACC0.72
WACC12.69%
2.3 Liquidity
A Current Ratio of 1.34 indicates that DSG should not have too much problems paying its short term obligations.
The Current ratio of DSG (1.34) is comparable to the rest of the industry.
A Quick Ratio of 1.34 indicates that DSG should not have too much problems paying its short term obligations.
Looking at the Quick ratio, with a value of 1.34, DSG is in line with its industry, outperforming 56.06% 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 | 1.34 | ||
| Quick Ratio | 1.34 |
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.
The Earnings Per Share has been growing by 27.35% on average over the past years. This is a very strong growth
The Revenue has grown by 14.90% in the past year. This is quite good.
DSG shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 15.80% yearly.
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.
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
The Price/Earnings ratio is 74.36, which means the current valuation is very expensive for DSG.
68.18% of the companies in the same industry are more expensive than DSG, based on the Price/Earnings ratio.
DSG is valuated expensively when we compare the Price/Earnings ratio to 29.39, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 57.96 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 72.73% of the companies in the same industry.
DSG's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 94.38.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 74.36 | ||
| Fwd PE | 57.96 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as DSG.
65.15% of the companies in the same industry are more expensive than DSG, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 49.6 | ||
| EV/EBITDA | 41.88 |
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 27.60% in the coming years. This may justify a more expensive valuation.
PEG (NY)2.74
PEG (5Y)2.72
EPS Next 2Y23.44%
EPS Next 3Y27.6%
5. Dividend
5.1 Amount
DSG does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
DESCARTES SYSTEMS GRP/THE
TSX:DSG (2/11/2025, 7:00:00 PM)
169.55
-5.79 (-3.3%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners87.2%
Inst Owner ChangeN/A
Ins Owners0.27%
Ins Owner ChangeN/A
Market Cap14.49B
Analysts77.78
Price Target111.3 (-34.36%)
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)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 Rank | Sector Rank | ||
|---|---|---|---|
| PE | 74.36 | ||
| Fwd PE | 57.96 | ||
| P/S | 16.01 | ||
| P/FCF | 49.6 | ||
| P/OCF | 48.33 | ||
| P/B | 7.46 | ||
| P/tB | 131.34 | ||
| EV/EBITDA | 41.88 |
EPS(TTM)2.28
EY1.34%
EPS(NY)2.93
Fwd EY1.73%
FCF(TTM)3.42
FCFY2.02%
OCF(TTM)3.51
OCFY2.07%
SpS10.59
BVpS22.73
TBVpS1.29
PEG (NY)2.74
PEG (5Y)2.72
Profitability
| Industry Rank | Sector 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 Rank | Sector 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 | 24.15 |
F-Score6
WACC12.69%
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%