skip to content
  1. Home
  2. >
  3. Questions
  4. >
  5. DSG: Descartes just reported Q2 earnings. [Descartes Systems Group Inc. (The)]
You can view 1 more answer this month. Sign up for a free trial for unlimited access.

Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Descartes just reported Q2 earnings. They have made 85 cents (US) for the 1st half of the year. Given that earnings are creeping up, maybe they make $1.75 or $1.80 this year. That would be about $2.40, $2.45 Cdn, something like that. The stock price is about 55 times that, giving it a very high p/e. I know it has always had a very high p/e. Earnings growth for the 1st half is only about 6%. I know DSG is a highly regarded business, they are pretty consistent, etc. but I am finding it hard to see the value of holding this stock with such sluggish growth compared to the very high p/e ratio. Seems it would be tough to see much price appreciation when the p/e is already so high and the growth is minimal. Is there reason to think the growth might be high enough in the next 2 -3 years to justify not only the current stock price, but a significantly higher price? I'm finding it difficult to justify continuing to hold a stock with a PEG ratio of about 9.
Asked by Dan on September 04, 2025
5i Research Answer:

EPS of $0.593 beat estimates of $0.592 and sales of $247.97M beat estimates of $240.83M. Sales grew 10% year-over-year and 7% from the previous quarter. Its services segment (93% of total sales) is growing nicely at 14%, and cash from operations growth was strong. Despite challenging global trade conditions, DSG delivered strong results driven by its high-margin, SaaS-based services segment. We feel these are strong results, and it reflects a potential resumption in growth, with operating cash flows growing 19% year-over-year, and its margins expanding slightly.

Analyst estimates have been trending higher recently, and earnings growth for FY2026 is expected to be about 19%, with FY2028 expected to be 18%. Its forward P/E is currently 41X, which is at a similar level to five years ago. While recent growth has slowed, these slight bumps in growth have occurred in the past as well, and its forward earnings trend is beginning to see positive momentum again. We would be comfortable holding at these levels, or buying here. 

Let us help YOU reach your financial goals today!

Start your FREE trial today and enjoy all the benefits of a 5i Membership including:

  • Access to a team of experts ready to answer your investments question 
  • Instant access to over 100,000 archived questions
  • A community of like-minded investors
  • Peace of mind knowing that 5i Research has only YOUR best interests in mind