Analysts covering The Descartes Systems Group Inc (TSX:DSG) are optimistically predicting triple-digit earnings per share to of 169.95% over the following three years. At a current EPS of $0.343, this growth rate means shareholders can expect an impending EPS of $0.927. To assess the reasonability of DSG’s earnings growth per share, we should look at its most recent growth rate delivered. Check out our latest analysis for Descartes Systems Group
How is Descartes Systems Group going to perform in the future?
Descartes Systems Group’s growth potential is very attractive. DSG is covered by 13 analysts who, by consensus, are bullish with earnings estimated to increase from current levels of $0.343 to $0.927 over the next couple of years. This indicates a relatively solid earnings per share growth rate of 169.95% over the next few years, which is an optimistic outlook in the near term. In the same period we should see the revenue jump from $216M to $351M and net income is predicted to shoot from $26M to $70M in the next couple of years, roughly staying around the same level. However, margins look rather unappealing at the current levels of revenue and earnings.
Basis for the growth
The past can be a helpful indicator for future performance for a stock. We can determine whether this level of expected growth is sustainable and whether the company continues to go from strength to strength. DSG’s earnings growth in the last five years was a weaker 6.44%, indicating a relatively more optimistic future painted for the company in the future. This belief may be supported by turnaround initiatives implemented in the past, or previous investments coming to fruition.
For DSG, I’ve compiled three relevant factors you should look at:
1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
2. Valuation: What is DSG worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether DSG is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of DSG? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.