Descartes Systems is cheaper than it has been in years, this analyst says

National Bank Financial analyst Doug Taylor says Descartes Systems Group’s (Descartes Systems Group Stock Quote, Chart, News, Analysts, Financials NASDAQ:DSGX) valuation pullback has created an opportunity, given its organic growth, M&A track record and supply chain software position.

As reported by the Globe and Mail, in a July 14 report, Taylor initiated coverage of Descartes with an “Outperform” rating and US $95.00 target.

Waterloo, Ont.-based Descartes provides cloud-based logistics and supply chain software, including routing, global trade management and customs compliance tools for shippers, carriers and logistics providers.

Taylor said Descartes has a long record of delivering shareholder returns through high single-digit organic growth and disciplined acquisitions, but its share price has weakened alongside other software names amid AI-related scrutiny.

“Descartes’ own trading multiple has reset back to 15 times NTM EBITDA, levels not seen in over 10 years,” Taylor said.

He said supply chain pressures remain constant and continue to change, supporting demand for modernization and Descartes’ software. Taylor also said organic growth has improved in recent quarters, while the company’s network elements and volume-based pricing help insulate it from pressure on traditional seat-based software models.

Taylor said Descartes also has significant M&A flexibility, with about US$350-million in pro forma cash, no debt and strong cash flow conversion.

Descartes recently acquired Drivin, a Santiago, Chile-based provider of last-mile delivery management solutions across Latin America, for US$30-million upfront and up to US$5-million in performance-based earnout.

Drivin’s platform supports route optimization, dispatch management and real-time execution visibility, with machine learning and agentic AI capabilities. Descartes said the acquisition expands its Latin American presence and adds last-mile logistics data that can support AI training, predictive analytics and optimization.

“Latin America represents a growth market for Descartes and for the broader logistics technology industry,” CEO Edward Ryan said.

Taylor said Descartes remains well-positioned to compound organic growth with further acquisitions, supported by a strong balance sheet and its record of generating returns from M&A.

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