Descartes Systems Group Inc.
Find Ratings ReportsDESCARTES SYSTEMS GROUP INC's gross profit margin for the fourth quarter of its fiscal year 2021 is essentially unchanged when compared to the same period a year ago. The company has grown sales and net income during the past quarter when compared with the same quarter a year ago, however, it was unable to keep up with the growth of the average competitor within its subsector. DESCARTES SYSTEMS GROUP INC is extremely liquid. Currently, the Quick Ratio is 2.02 which clearly shows the ability to cover any short-term cash needs. The company managed to increase its liquidity from the same period a year ago, despite already having strong liquidity to begin with. This would indicate improved cash flow.
During the same period, stockholders' equity ("net worth") has increased by 9.74% from the same quarter last year. Overall, the key liquidity measurements indicate that the company is very unlikely to face financial difficulties in the near future.
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| Income Statement | Q4 FY21 | Q4 FY20 |
|---|---|---|
| Net Sales ($mil) | 112.37 | 93.41 |
| EBITDA ($mil) | 47.18 | 36.66 |
| EBIT ($mil) | 30.85 | 21.26 |
| Net Income ($mil) | 19.19 | 17.2 |
| Balance Sheet | Q4 FY21 | Q4 FY20 |
|---|---|---|
| Cash & Equiv. ($mil) | 213.44 | 133.66 |
| Total Assets ($mil) | 1185.43 | 1063.25 |
| Total Debt ($mil) | 11.41 | 13.06 |
| Equity ($mil) | 999.82 | 911.07 |
| Profitability | Q4 FY21 | Q4 FY20 |
|---|---|---|
| Gross Profit Margin | 77.27 | 76.67 |
| EBITDA Margin | 41.98 | 39.24 |
| Operating Margin | 27.45 | 22.76 |
| Sales Turnover | 0.36 | 0.33 |
| Return on Assets | 7.27 | 4.9 |
| Return on Equity | 8.63 | 5.72 |
| Debt | Q4 FY21 | Q4 FY20 |
|---|---|---|
| Current Ratio | 2.19 | 1.95 |
| Debt/Capital | 0.01 | 0.01 |
| Interest Expense | 0.28 | 0.28 |
| Interest Coverage | 109.38 | 76.74 |
| Share Data | Q4 FY21 | Q4 FY20 |
|---|---|---|
| Shares outstanding (mil) | 84.76 | 84.5 |
| Div / share | 0.0 | 0.0 |
| EPS | 0.22 | 0.2 |
| Book value / share | 11.8 | 10.78 |
| Institutional Own % | n/a | n/a |
| Avg Daily Volume | 220598.0 | 180456.0 |
BUY. DESCARTES SYSTEMS GROUP INC's P/E ratio indicates a significant premium compared to an average of 45.65 for the Publishing Industries (except Internet) subsector and a significant premium compared to the S&P 500 average of 19.86. Conducting a second comparison, its price-to-book ratio of 4.84 indicates a premium versus the S&P 500 average of 3.81 and a significant discount versus the subsector average of 10.25. The price-to-sales ratio is well above both the S&P 500 average and the subsector average, indicating a premium. The valuation analysis reveals that, DESCARTES SYSTEMS GROUP INC seems to be trading at a premium to investment alternatives.
| Price/Earnings |
|
Price/Cash Flow |
| |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| DSGX 57.10 | Peers 45.65 | DSGX 27.48 | Peers 29.09 | |||||||||||||||||||||
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Premium. A higher P/E ratio than its peers can signify a more expensive stock or higher growth expectations. DSGX is trading at a significant premium to its peers. |
Average. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures. DSGX is trading at a valuation on par to its peers. |
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| Price/Projected Earnings |
|
Price to Earnings/Growth |
|
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| DSGX 41.99 | Peers 28.25 | DSGX 4.76 | Peers 2.12 | |||||||||||||||||||||
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Premium. A higher price-to-projected earnings ratio than its peers can signify a more expensive stock or higher future growth expectations. DSGX is trading at a significant premium to its peers. |
Premium. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples. DSGX trades at a significant premium to its peers. |
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| Price/Book |
|
Earnings Growth |
|
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| DSGX 4.84 | Peers 10.25 | DSGX 66.66 | Peers 22.62 | |||||||||||||||||||||
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Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet. DSGX is trading at a significant discount to its peers. |
Higher. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios. DSGX is expected to have an earnings growth rate that significantly exceeds its peers. |
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| Price/Sales |
|
Sales Growth |
|
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| DSGX 11.40 | Peers 8.94 | DSGX 21.80 | Peers 24.61 | |||||||||||||||||||||
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Premium. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales. DSGX is trading at a significant premium to its subsector. |
Lower. A sales growth rate that trails the subsector implies that a company is losing market share. DSGX trails its peers on the basis of sales growth. |
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