Descartes Systems Valuation Analysis
| DSG Stock | CAD 98.92 -1.43 -1.43% |
Above Model Estimate
Today
The intrinsic value estimate for Descartes Systems is based on a 3 months horizon. A high P/E ratio indicates strong growth expectations already embedded in pricing. Extending the time horizon generally improves valuation stability.
For Descartes Systems, DCF-based intrinsic value and relative multiples each answer a different valuation question. An intrinsic value estimate based on Descartes Systems' projected cash flows is cross-checked against peer multiples.
Main Profitability Drivers
On a profitability basis, Descartes Systems carries a 24.00% net margin and a 34.00% operating margin. Non-operating charges narrow Descartes Systems' margins by roughly 10.00 percentage points between the operating and net income lines. From $743.36 million in revenue, Descartes Systems retained $561.93 million after cost of goods and reported $167 million in net income. Descartes Systems' return on equity of 11.00% and return on assets of 9.33% gauge how effectively the company converts invested capital into earnings. Most of Descartes Systems' profitability drivers are moving in the right direction, reinforcing the case for earnings durability. A more granular view is available in Descartes Systems' profitability metrics for a broader perspective on earnings quality.
Price Book 3.87 | Gross Profit | Price Sales 11.66 | Profit Margin | Enterprise Value Revenue 8.09 |
Descartes Systems Cash | $371.22 million |
Cash stood at $353.55 million as of December 31, 2025.
Descartes Systems is a software company generating revenue through recurring subscriptions, enterprise contracts, and platform usage, which directly shapes its valuation profile and margin structure. Trading as a growth-oriented stock in Software, its valuation multiples reflect expectations for forward earnings expansion. What follows breaks down capital structure, margins, and earnings quality to assess whether current pricing is supported by fundamentals.
Total Value Analysis
The market-value snapshot for Descartes Systems Group reflects enterprise value of 8.04 billion, market capitalization of 8.5 billion, debt of 8.29 million, and cash and equivalents of 29.55 million as of latest reporting. This capital-structure snapshot is most informative when tested against operating margins, cash generation, and debt servicing capacity.| Takeover Price | Market Cap | Debt Obligations | Cash & Equivalents |
8.04 billion | 8.5 billion | 8.29 million | 29.55 million |
Investor Information
About 88.0% of DSG shares are held by institutions such as insurance companies. The book value of DSG was currently reported as 25.71. DSG has Price/Earnings To Growth (PEG) ratio of 1.45. Descartes Systems had not issued any dividends in recent years. Liquidity coverage and operating returns support Descartes Systems Group maintaining stable financial positioning. Asset-level profitability holds steady, reflecting balanced cost management and revenue retention.Asset Utilization
The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Descartes Systems has an asset utilization ratio of 39.54 percent. This suggests that the Company is making C$0.4 for each dollar of assets. An increasing asset utilization means that Descartes Systems Group is more efficient with each dollar of assets it utilizes for everyday operations.Macro event markers
Profitability Analysis
Based on Descartes Systems' financial statements, Descartes Systems Group maintains a strong margin profile with a net profit margin of 24.0% and an operating margin of 34.0%, producing net income of 167 million. Return on equity is 11.0%. Profitability trends are broadly favorable, with a majority of key metrics improving year over year.Net Income | First Reported 1997-07-31 | Previous Quarter 43.9 million | Current Value 46.33 million | Quarterly Volatility 17.76 million |
Macro event markers
| Current Value | Last Year | Change From Last Year | 10 Year Trend | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Gross Profit Margin | 55.00% | 65.95% |
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The profitability picture for Descartes Systems Group starts with how effectively revenue converts to earnings. Net margin of 24.0% reflects solid earnings conversion and cost discipline relative to revenue. Margin trends and return metrics below indicate whether the earnings profile is strengthening or deteriorating. Descartes Systems reports return on equity of 11.0%, positive but not at levels that signal strong capital efficiency.
Earnings per Share Projection vs Actual
Analyst consensus on Descartes Systems' EPS captures the range of professional forecasts and their trajectory over time. An operating margin of 34.0% frames the cost structure behind Descartes Systems' reported EPS. Comparing Descartes Systems' EPS against revenue growth and cash conversion clarifies earnings quality. Consensus EPS estimates for Descartes Systems Group represent the market's baseline earnings expectation. Deviations from this consensus on report day typically drive the sharpest price reactions. Descartes Systems reported estimated earnings of 0.63 in earnings per share on 30th of April 2026. Revisions to EPS estimates — direction and magnitude — often move valuation multiples before the actual report date.Macro event markers
Ownership Allocation
The majority of Descartes Systems' outstanding shares are owned by institutions. This level of institutional concentration typically reflects the stock's inclusion in major indices, consistent liquidity, and long-term investment attractiveness for funds managing assets on behalf of pensions, endowments, and other institutional clients. With institutions controlling the majority of the float, changes in quarterly 13F filings can provide meaningful signals about shifts in professional investor sentiment.Revenue and Profit Overview
DSG reported revenue of $743.36 million. Net Income was $167 million with profit before overhead, payroll, taxes, and interest of $561.93 million.Interpreting Recent Signals
A price-to-earnings ratio of 118.05 sits well above typical market averages, reflecting expectations for significant future growth rather than current earnings alone. This pricing is consistent with how the sector values businesses where profitability is supported by scale, recurring revenue, and platform economics. Descartes Systems retains 24.0% of revenue as profit, a level that provides meaningful downside protection relative to most peers in Software. This margin profile is a direct function of the underlying business economics. Leverage at 46.1 is elevated, reflecting the heavy financing requirements inherent in platform and software companies. For a business built on its scalable, platform-driven revenue model, this debt load amplifies both upside and downside from earnings swings. The 11.0% ROE places Descartes Systems in a range where the business covers its cost of capital but has room to improve how effectively equity translates into earnings. Descartes Systems trades with growth-oriented dynamics, where expectations for future earnings expansion drive larger price swings than value-oriented names typically experience. Current pricing embeds an expectation of sustained above-average earnings growth. A shift in platform adoption, margin expansion, and the durability of growth-oriented pricing would alter the balance between what the market has priced in and what ultimately materializes.
Valuation Synthesis
Descartes Systems Group operates as a high-margin operation that also carries significant leverage, where debt amplifies both returns and downside exposure within the platform and software companies space. The earnings and capital-return profile places the company within the mid-range of its peer group, with performance that supports but does not clearly exceed current valuation levels. However, elevated leverage alongside strong margins creates a dependency on continued earnings stability - debt servicing pressures the business during periods of revenue softness. The data points to a business where current multiples are less informative because underlying profitability has not been established. A re-rating depends on platform adoption, margin expansion, and the durability of growth-oriented pricing.
For Descartes Systems Group, the valuation signals above are most useful when compared against future developments as new data becomes available. At current multiples, the valuation is priced for continued growth, making earnings trajectory the key variable to watch.
Valuation Framework, Methodology & Assumptions
Descartes Systems is a mid-cap equity in Application Software, Software - Application, Information Technology categories. Growth expectations are weighed against macro conditions. Lower beta characteristics could moderate reactions to large market movements. Valuation context for Descartes Systems is currently framed by P/B of 3.87, P/S of 11.66, enterprise value (TTM) of 8.04 billion.
Descartes Systems Group values are built from periodic company reporting and market reference feeds, with reporting definitions aligned before display. Valuation outputs are model-derived and depend on published assumptions and reference inputs.
The analysis above is generated by quantitative models and is provided for informational and educational purposes only. It does not constitute financial advice, investment recommendations, or an endorsement to buy or sell any security. All investing involves risk, including the possible loss of principal. Consult a qualified financial advisor before making investment decisions. See our Terms of Use for full details.
Financial data referenced in this analysis is derived from publicly available SEC filings, audited financial statements, and third-party market data providers. The intrinsic value estimate is generated by Macroaxis quantitative models that incorporate fundamental analysis, technical indicators, and risk metrics.
The methodology combines multiple analytical inputs:
- Fundamental analysis - financial statements, profitability ratios, debt structure, and cash flow metrics sourced from SEC filings and public financial reports
- Technical indicators - historical price patterns, momentum signals, and volatility measures
- Risk assessment - probability of bankruptcy models, market risk metrics, and downside scenario analysis
- Peer comparison - relative valuation against industry peers using standardized multiples
Model outputs are refreshed periodically as new financial data becomes available. Past model performance is not indicative of future results. The intrinsic value estimate reflects a point-in-time calculation and should be considered alongside other research and professional advice.
Data sourced from SEC filings (EDGAR), public financial statements, and market data providers.
Editorial review and methodology oversight provided by: Raphi Shpitalnik, Junior Member of Macroaxis Editorial Board