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Descartes' Stock Surges 20% YTD: Will the Rally Last?
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The Descartes Systems Group Inc.’s (DSGX - Free Report) shares have been performing well on the trading front with a 19.6% year-to-date (YTD) gain compared with the S&P 500 composite and sub-industry’s growth of 17.8% and 9.2%, respectively. The stock is still down 4% from its 52-week high level of $104.71, reached on Jul 16, 2024.
Based in Canada, Descartes Systems Group provides software-as-a-service logistics solutions to businesses, including transportation and logistics, manufacturing, retail and healthcare. The company benefits from momentum in real-time visibility, global trade intelligence, routing and scheduling solutions and e-commerce business.
In the last reported quarter, Services revenues (contributed 91% to total revenues) amounted to $137.8 million, up 11% year over year. The uptick was primarily attributable to an increase in sales to an expanded customer base of global trade intelligence, routing and transportation management solutions.
Image Source: Zacks Investment Research
Synergies From Acquisitions Bode Well for DGSX
DGSX has also been active on the acquisition front. Buyouts have aided growth by expanding product portfolio and adding competence. The company’s recent acquisitions include the buyout of Aerospace Software Developments (“ASD”) in April 2024. Based in Dublin, Ireland, ASD is a software company that builds mission-critical applications based on modern RFID technology, specifically engineered for the Aerospace and Aviation market sectors.
In March 2024, the company acquired OCR Services, Inc., specializing in global trade compliance solutions and content. OCR’s controlled export data is instrumental in broadening DSGX’s vast global trade content library for customers and partners, including SAP and Oracle. Some other notable acquisitions in the recent past are Localz (2023), GroundCloud (2023) and Supply Vision (2023).
Synergies arising from the acquisition of OCR and Thyme ASD along with healthy momentum in services revenues, led to 11% year-over-year growth in total revenues in the fiscal first quarter. Also, acquisitions settled in fiscal 2024, including GroundCloud and Localz favorably impacted revenue growth.
Estimates Unchanged for DSGX
The Zacks Consensus Estimate for fiscal 2025 and 2026 revenues is pegged at $634.9 million and $704.6 million, respectively, indicating growth of 10.8% and 11% from the year-ago levels.
The estimated figures for fiscal 2025 and 2026 EPS, $1.70 and $2.13, indicate an increase of 26.7% and 25.3%, respectively, from the prior-year actuals.
The consensus mark for fiscal 2025 and 2026 EPS has remained unchanged in the past 60 days.
Headwinds Persists for DSGX
Ongoing macroeconomic weakness coupled with forex volatility remain concerns for this Zacks Rank #3 (Hold) company.
Rising operating costs and integration risks are other headwinds. In the last reported quarter, total operating expenses were $54.6 million, up from $50.6 million in the prior-year quarter. The uptick was due to rising stock-based compensation costs and the partial period of costs from the fiscal 2025 acquisitions.
The Zacks Consensus Estimate for Badger Meter’s 2024 EPS is pegged at $4.06, up 4.4% in the past 30 days. BMI’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 12.9%. The long-term earnings growth rate is 17.9%. Its shares have risen 23.6% in the past year.
The Zacks Consensus Estimate for ANSS’ 2024 earnings is pegged at $9.72, up 3.7% in the past 30 days. ANSS’ earnings beat the Zacks Consensus Estimate in three of the last four quarters while missing the mark once, with the average surprise being 4.8%. Its shares have risen 3.6% in the past year.
The Zacks Consensus Estimate for MANH’s 2024 EPS is pegged at $4.26. MANH’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, with the average surprise being 26.6%. The stock has surged 34.9% in the past year.
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Descartes' Stock Surges 20% YTD: Will the Rally Last?
The Descartes Systems Group Inc.’s (DSGX - Free Report) shares have been performing well on the trading front with a 19.6% year-to-date (YTD) gain compared with the S&P 500 composite and sub-industry’s growth of 17.8% and 9.2%, respectively. The stock is still down 4% from its 52-week high level of $104.71, reached on Jul 16, 2024.
Based in Canada, Descartes Systems Group provides software-as-a-service logistics solutions to businesses, including transportation and logistics, manufacturing, retail and healthcare. The company benefits from momentum in real-time visibility, global trade intelligence, routing and scheduling solutions and e-commerce business.
In the last reported quarter, Services revenues (contributed 91% to total revenues) amounted to $137.8 million, up 11% year over year. The uptick was primarily attributable to an increase in sales to an expanded customer base of global trade intelligence, routing and transportation management solutions.
Image Source: Zacks Investment Research
Synergies From Acquisitions Bode Well for DGSX
DGSX has also been active on the acquisition front. Buyouts have aided growth by expanding product portfolio and adding competence. The company’s recent acquisitions include the buyout of Aerospace Software Developments (“ASD”) in April 2024. Based in Dublin, Ireland, ASD is a software company that builds mission-critical applications based on modern RFID technology, specifically engineered for the Aerospace and Aviation market sectors.
In March 2024, the company acquired OCR Services, Inc., specializing in global trade compliance solutions and content. OCR’s controlled export data is instrumental in broadening DSGX’s vast global trade content library for customers and partners, including SAP and Oracle. Some other notable acquisitions in the recent past are Localz (2023), GroundCloud (2023) and Supply Vision (2023).
Synergies arising from the acquisition of OCR and Thyme ASD along with healthy momentum in services revenues, led to 11% year-over-year growth in total revenues in the fiscal first quarter. Also, acquisitions settled in fiscal 2024, including GroundCloud and Localz favorably impacted revenue growth.
Estimates Unchanged for DSGX
The Zacks Consensus Estimate for fiscal 2025 and 2026 revenues is pegged at $634.9 million and $704.6 million, respectively, indicating growth of 10.8% and 11% from the year-ago levels.
The estimated figures for fiscal 2025 and 2026 EPS, $1.70 and $2.13, indicate an increase of 26.7% and 25.3%, respectively, from the prior-year actuals.
The consensus mark for fiscal 2025 and 2026 EPS has remained unchanged in the past 60 days.
Headwinds Persists for DSGX
Ongoing macroeconomic weakness coupled with forex volatility remain concerns for this Zacks Rank #3 (Hold) company.
Rising operating costs and integration risks are other headwinds. In the last reported quarter, total operating expenses were $54.6 million, up from $50.6 million in the prior-year quarter. The uptick was due to rising stock-based compensation costs and the partial period of costs from the fiscal 2025 acquisitions.
Tech Stocks to Consider
Some better-ranked stocks worth consideration in the broader technology space are Badger Meter (BMI - Free Report) , Manhattan Associates (MANH - Free Report) and ANSYS (ANSS - Free Report) . While Badger Meter and Manhattan Associates sport a Zacks Rank #1 (Strong Buy), ANSYS carries a Zacks Rank #2 (Buy) each, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Badger Meter’s 2024 EPS is pegged at $4.06, up 4.4% in the past 30 days. BMI’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 12.9%. The long-term earnings growth rate is 17.9%. Its shares have risen 23.6% in the past year.
The Zacks Consensus Estimate for ANSS’ 2024 earnings is pegged at $9.72, up 3.7% in the past 30 days. ANSS’ earnings beat the Zacks Consensus Estimate in three of the last four quarters while missing the mark once, with the average surprise being 4.8%. Its shares have risen 3.6% in the past year.
The Zacks Consensus Estimate for MANH’s 2024 EPS is pegged at $4.26. MANH’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, with the average surprise being 26.6%. The stock has surged 34.9% in the past year.