Insider Buy / Potential Earnings Play: DSGX / DSG.TO

Large Insider Buy / Potential Earnings Play: DSGX / DSG.TO

*Note – the DSG.TO ticker trades on the TSX and my references are all to that ticker and dollar amounts refer to CAD. DSGX trades on Nasdaq in USD.

The Company (from Google): “The Descartes Systems Group Inc. is a Canadian multinational technology company specializing in logistics software, supply chain management software, and cloud-based services for logistics businesses”

Why I Am Looking At It (From the Globe and Mail, Jan. 24): “On Jan. 14, chief financial officer Allan Brett invested over $878,000 in shares of Descartes. He bought 10,000 shares at a cost per share of $87.89, increasing this particular account’s position to 35,000 shares.”

-The stock declined over 18% in January before the CEO made his purchase. He bought when it was still declining.

-The RSI on Jan. 24 was 29 (per Globe and Mail) - a bit oversold.

-Tin Foil Hat: This company sells logistics and supply chain software. There have been supply chain problems. Companies need to fix them and will use software.

-Confirmation bias (RBC analyst quoted in the Globe and Mail Dec, 2, 2021) : “Q4 baseline implies that double-stacked organic growth is likely to reach all-time highs next quarter,” said RBC Dominion Securities analyst Paul Treiber in a research note. “Although trade volumes are elevated at the moment, we believe that Descartes is also benefiting from stronger structural demand for logistics software, which is augmenting Descartes’ capital allocation model.”

Yesterday’s Closing Price: $84.44 (less than the CEO paid).

Earnings Date (from Yahoo Finance) : Mar. 1, 2022 – Mar. 7, 2022

Previous Earnings (Dec. 1, 2021): Consensus EPS $0.29, Actual $0.37 – beat by $0.08CAD

Movement Before Previous Earnings: It declined from $115 to around $100

Movement After Previous Earnings: The stock gapped up from 100 and ran as high as 104 intraday. Then it dumped.

What Happened Next: It ran back up to over 106 intraday then dumped again. After that, it kept moving in a downward channel and yesterday closed at 84.44.

Conclusion: I think this is still early days for this stock. The earnings report in March is the next apparent catalyst. I have started buying some shares.


Thanks for the writeup. I’ve been in the supply chain software space for about 7 years now from both a services and sales perspective, and I can go ahead and say that it is a very competitive space in terms of landing SaaS supply chain deals. Its an interesting landscape of some big name giants (SAP, Oracle, JDA), and a lot of mid-tier solutions that are often battling to close deals against these big names. Descartes isn’t a name I am familiar with.

In terms of being a name in the market is being exposed somewhere in Gartner’s Magic Quadrant. Supply chain companies strive to be acknowledged here as it exposes them to inbound leads. From some quick research, it looks like Descartes offers a wide variety of supply chain solutions, but from the Gartner perspective looks to be known in the TMS (Transportation Management Solution) space. Descartes has also made several recent acquisitions of companies that are focused in the TMS.

The chart does look to tell that the company has had some nice, steady growth, so I think I would consider this a more long-term hold if I were to play. And as you mentioned, supply chain software is HOT right now - I can say from my work that it is quite eye-opening to see how many companies are still planning and executing in outdated solutions or even just on excel sheets.