Descartes Stock Story


USD 70.65  1.38  1.92%   

Descartes Sys Group is scheduled to announce its earnings today. Descartes Sys Free Cash Flow per Share is fairly stable at the moment as compared to the past year. Descartes Sys reported Free Cash Flow per Share of 2.02 in 2021. Gross Margin is likely to rise to 0.81 in 2022, whereas Average Assets are likely to drop slightly above 945.9 M in 2022. As many millenniums are trying to avoid technology space, it makes sense to break down Descartes Sys Group a little further and try to understand its current market patterns.
Published over two months ago
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Will Descartes Sys (NASDAQ:DSGX) debt increase in July

Descartes Sys currently holds 11.41 M in liabilities with Debt to Equity (D/E) ratio of 0.01, which may suggest Descartes Sys is not taking enough advantage from borrowing. This firm has a current ratio of 2.15, suggesting that it is liquid enough and is able to pay its financial obligations when due. Debt can assist Descartes Sys until it has trouble settling it off, either with new capital or with free cash flow. So, Descartes Sys' shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like Descartes Sys Group sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Descartes to invest in growth at high rates of return. When we think about Descartes Sys' use of debt, we should always consider it together with cash and equity.
Descartes Sys financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of Descartes Sys, including all of Descartes Sys's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of Descartes Sys assets, the company is considered highly leveraged. Understanding the composition and structure of overall Descartes Sys debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it.
Please read more on our technical analysis page.

Understanding Descartes Total Debt

Descartes Sys Group liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. Descartes Sys Group has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on Descartes Sys balance sheet include debt obligations and money owed to different Descartes Sys vendors, workers, and loan providers. Below is the chart of Descartes main long-term debt accounts currently reported on its balance sheet.
You can use Descartes Sys Group financial leverage analysis tool to get a better grip on understanding its financial position

How important is Descartes Sys's Liquidity

Descartes Sys financial leverage refers to using borrowed capital as a funding source to finance Descartes Sys Group ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Descartes Sys financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Descartes Sys's total debt and its cash.

What is driving Descartes Sys Investor Appetite?

Descartes Sys Group price slide over the last few months could raise concerns from investors as the firm is trading at a share price of 59.95 on 111,535 in volume. The company directors and management were not very successful in positioning the firm resources to exploit market volatility in May. However, diversifying your holdings with Descartes Sys Group or similar stocks can still protect your portfolio during high-volatility market scenarios. The stock standard deviation of daily returns for 90 days investing horizon is currently 2.46. The current volatility is consistent with the ongoing market swings in May 2022 as well as with Descartes Sys unsystematic, company-specific events.

Liabilities Breakdown

38.9 M
Tax Liabilities
106.9 M
Current Liabilities
46.1 M
Long-Term Liabilities
Total Liabilities153.04 Million
Current Liabilities106.92 Million
Long-Term Liabilities46.12 Million
Tax Liabilities38.92 Million

Will Descartes continue to rise?

Current jensen alpha indicator falls down to -0.19. Possible price jump? Descartes Sys Group exhibits very low volatility with skewness of -0.07 and kurtosis of 1.1. However, we advise investors to further study Descartes Sys Group technical indicators to make sure all market info is available and is reliable. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Descartes Sys' stock risk against market volatility during both bullying and bearish trends. The higher level of volatility that comes with bear markets can directly impact Descartes Sys' stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.

Descartes Sys Implied Volatility

Descartes Sys' implied volatility exposes the market's sentiment of Descartes Sys Group stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Descartes Sys' implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that Descartes Sys stock will not fluctuate a lot when Descartes Sys' options are near their expiration.

Our Final Take On Descartes Sys

While some firms within the software—application industry are still a little expensive, even after the recent corrections, Descartes Sys may offer a potential longer-term growth to investors. The bottom line, as of the 1st of June 2022, our concluding 90 days buy-hold-sell recommendation on the company is Strong Hold. We believe Descartes Sys is undervalued with average probability of distress for the next two years.

Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Raphi Shpitalnik do not own shares of Descartes Sys Group. Please refer to our Terms of Use for any information regarding our disclosure principles.

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