What Should Investors Know About The Descartes Systems Group Inc’s (TSE:DSG) Future?
The Descartes Systems Group Inc’s (TSX:DSG) most recent earnings announcement in January 2018 showed that the company gained from a robust tailwind, leading to a double-digit earnings growth of 12.76%. Below, I’ve laid out key numbers on how market analysts view Descartes Systems Group’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. Check out our latest analysis for Descartes Systems Group
Market analysts’ consensus outlook for next year seems buoyant, with earnings rising by a robust 33.63%. This growth seems to continue into the following year with rates arriving at double digit 66.92% compared to today’s earnings, and finally hitting US$50.58M by 2021.
Even though it’s helpful to be aware of the growth each year relative to today’s level, it may be more beneficial analyzing the rate at which the company is rising or falling on average every year. The benefit of this technique is that we can get a bigger picture of the direction of Descartes Systems Group’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I put a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 21.98%. This means that, we can anticipate Descartes Systems Group will grow its earnings by 21.98% every year for the next few years.
Next Steps:
For Descartes Systems Group, I’ve put together three key factors you should further research:
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.
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.
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.
