Valued at a market cap of $13.4 billion, Descartes Systems (TSX:DSG) is a tech stock that has returned more than 700% to shareholders in the past decade. Through its cloud-based logistics technology platform, Descartes Systems provides global logistics technology solutions.
It offers modular software for routing, transportation management, e-commerce fulfillment, customs compliance, global trade intelligence, and B2B connectivity. These solutions help businesses route deliveries, execute shipments, process transportation payments, analyze trade data, file customs documents, and optimize other logistics processes.
Descartes serves transportation providers, logistics service providers, and distribution-intensive companies through subscription and licensing models, as well as consulting and implementation services.
While the TSX tech stock has delivered outsized gains to investors, let’s see if it remains a top investment at the current valuation.
Should you buy, sell, or hold Descartes Systems stock?
Descartes Systems reported record fiscal fourth quarter (Q4) of 2025 (ended in January) results, with revenues increasing 13% year over year to US$167.5 million, powered by a 15% jump in services revenue. The global logistics technology provider saw net income rise 27% to US$37.4 million, while adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) grew 14% to US$75 million, reaching a margin of 45%.
For fiscal year 2025, Descartes reported a 14% revenue increase to $651 million, with net income climbing 24% to $143.3 million. It ended the quarter with $236 million in cash, no debt, and an undrawn $350 million credit line.
CEO Edward Ryan highlighted three key growth drivers, which include strength in domestic logistics and supply chain solutions, increasing demand for the Global Trade Intelligence business amid a complex tariff environment, and contributions from five acquisitions completed during fiscal 2025.
Recent acquisitions included MyCarrierPortal, which helps U.S. freight brokers manage carrier risk, and Sellercloud, an inventory and order management platform for e-commerce sellers. Both acquisitions are performing ahead of expectations, with strong cross-selling opportunities already materializing.
The Sellercloud acquisition fills a strategic gap in Descartes’s e-commerce portfolio. It complements the company’s existing shipping and warehouse management solutions. Moreover, the platform helps merchants manage inventory across multiple sales channels, automate order routing, and optimize warehouse operations.
Is this TSX tech stock undervalued?
Looking ahead to fiscal 2026, management maintained its long-standing target of annual adjusted EBITDA growth of between 10% and 15% despite an uncertain global trade environment. CFO Allan Brett noted that Descartes recently completed a restructuring plan to streamline operations by reducing approximately 45 personnel positions, expected to save about $4 million annually.
Analysts tracking the TSX tech stock expect adjusted earnings to expand from $1.70 per share in fiscal 2025 to $3.99 per share in fiscal 2029.
Today, the TSX stock trades at a forward price-to-earnings multiple of 47 times, which is higher than its 10-year average of 36 times. If we assume Descartes trades at a forward earnings multiple of 40 times, the stock will be priced at $160 in May 2028, indicating an upside potential of 43% from current levels.
Descartes is positioned to navigate a volatile macro environment due to diversification across domestic and international logistics, multiple transportation modes, and a global customer base of over 26,000 clients.
It remains well-capitalized and positioned to continue its acquisition strategy, particularly if market uncertainty presents attractive opportunities.
