Is beaten down Descartes Systems a buy?

Descartes Systems (Descartes Systems Stock Quote, Chart, News, Analysts, Financials TSXV:DSG) shares are down about 17% year to date and more than 20% over the past six months, hit by trade uncertainty and U.S. tariffs, but Raymond James Investment Counsel portfolio manager Chris Blumas believes the stock offers long-term value.

“This is one that has always traded well,” Blumas said June 19 on BNN Bloomberg’s Market Watch. “It trades currently at a fairly rich valuation, but it typically trades at a much richer valuation. And with the trade uncertainty and with the Trump tariffs, this is a name that has got hit.”

Blumas said Descartes is “still below my buy price today,” but, “It is a name that I think will do very well long term. And the valuation is attractive right now.”

Waterloo, Ontario-based Descartes is a global provider of logistics and supply chain management software. It generates more than 90% of its revenue through a software-as-a-service model, with the United States accounting for nearly 70% of sales last year.

Despite market headwinds, the company has no long-term debt and holds more than $175-million in cash, which it has used in the past to acquire competitors with complementary capabilities. Shares currently trade at about 40 times trailing cash flow, with a trailing free cash flow yield of roughly 2.5%.

Street consensus includes nine “Buy” and five “Hold” ratings, with a target price of $164.03. The stock closed at $142.01 on June 24.

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