The Descartes Systems Group Inc.
The Descartes Systems Group Inc. Fundamental Analysis
The Descartes Systems Group Inc. (DSG.TO) shows moderate financial fundamentals with a PE ratio of 37.25, profit margin of 22.47%, and ROE of 10.76%. The company generates $0.7B in annual revenue with strong year-over-year growth of 13.63%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 73.9/100 based on profitability, valuation, growth, and balance sheet metrics. The B grade reflects solid fundamentals with room for improvement in valuation or growth.
Fundamental Health Score
We analyze DSG.TO's fundamental strength across five key dimensions:
Efficiency Score
WeakDSG.TO struggles to generate sufficient returns from assets.
Valuation Score
WeakDSG.TO trades at a premium to fair value.
Growth Score
ExcellentDSG.TO delivers strong and consistent growth momentum.
Financial Health Score
ExcellentDSG.TO maintains a strong and stable balance sheet.
Profitability Score
ModerateDSG.TO maintains healthy but balanced margins.
Key Financial Metrics
Is DSG.TO Expensive or Cheap?
P/E Ratio
DSG.TO trades at 37.25 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, DSG.TO's PEG of 8.48 indicates potential overvaluation.
Price to Book
The market values The Descartes Systems Group Inc. at 3.82 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 20.88 times EBITDA. This signals the market has high growth expectations.
How Well Does DSG.TO Make Money?
Net Profit Margin
For every $100 in sales, The Descartes Systems Group Inc. keeps $22.47 as profit after all expenses.
Operating Margin
Core operations generate 29.65 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $10.76 in profit for every $100 of shareholder equity.
ROA
The Descartes Systems Group Inc. generates $8.75 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
The Descartes Systems Group Inc. generates strong operating cash flow of $267.58M, reflecting robust business health.
Free Cash Flow
The Descartes Systems Group Inc. generates strong free cash flow of $261.82M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $3.04 in free cash annually.
FCF Yield
DSG.TO converts 4.27% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
37.25
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
8.48
vs 25 benchmark
P/B Ratio
Price to book value ratio
3.82
vs 25 benchmark
P/S Ratio
Price to sales ratio
8.37
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.005
vs 25 benchmark
Current Ratio
Current assets to current liabilities
2.16
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.11
vs 25 benchmark
ROA
Return on assets percentage
0.09
vs 25 benchmark
ROCE
Return on capital employed
0.13
vs 25 benchmark
How DSG.TO Stacks Against Its Sector Peers
| Metric | DSG.TO Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 37.25 | 34.22 | Neutral |
| ROE | 10.76% | 1033.00% | Weak |
| Net Margin | 22.47% | -48116.00% (disorted) | Strong |
| Debt/Equity | 0.01 | 0.44 | Strong (Low Leverage) |
| Current Ratio | 2.16 | 5.66 | Strong Liquidity |
| ROA | 8.75% | -288969.00% (disorted) | Weak |
DSG.TO outperforms its industry in 3 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews The Descartes Systems Group Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
86.86%
Industry Style: Growth, Innovation, High Beta
High GrowthEPS CAGR
262.14%
Industry Style: Growth, Innovation, High Beta
High GrowthFCF CAGR
96.69%
Industry Style: Growth, Innovation, High Beta
High Growth