This TSX supply chain stock’s profit surged 92% YoY in Q3. Buy alert?

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 This TSX supply chain stock’s profit surged 92% YoY in Q3. Buy alert?
Image source: © 2021 Kalkine Media®

Highlights

  • The COVID-19 pandemic has highlighted the need for resilient supply chains that can weather the unforeseen problems that may stem from a pandemic-like situation or climate change.
  • The Canadian supply chain stock mentioned here galloped by over 193 in the last three years.
  • The enterprise saw a net income growth of 92 per cent a year-over-year (YoY) in Q3 FY2022.

While there has been some recovery, the COVID-19 pandemic caused significant disruption in the global supply chain network this year. Many industries and businesses got hurt due to the cross-countries lockdown and nationwide quarantine.

Also, the pandemic has highlighted the need for resilient supply chains that can weather the unforeseen problems that may stem from a pandemic-like situation or climate change. World economies and businesses have realized the importance of an efficient supply chain network due to this. 

One Canadian company, for that matter, has done significant work in this field by using its Software-as-a-Service (SaaS) technology to assist the supply chain industry.

This company provides cloud-based solutions to monitor the entire logistic process through its Global Logistics Network, all from routing to delivery.

Which company are we talking about?

We are talking about Descartes Systems Group Inc, which reported a year-over-year (YoY) surge of 100 per cent in its earnings per share (EPS) on a diluted basis.

Descartes Systems (TSX:DSG) stock galloped over 193% 3 years

Formed in 1981, Descartes Systems Group Inc saw its scrip rocket by over 193 per cent in the past three years, bringing its year-to-date (YTD) gain to almost 37 per cent.

The supply chain scrip clocked a day high of C$ 102.47 and closed at C$ 101.91 apiece on Tuesday, December 21. At this price, the stock was roughly 49 per cent above its 52-week low of 68.61 apiece (May 19, 2021).

Descartes Systems Group held a price-to-book (P/B) ratio of 6.745 and a price-to-cash flow (P/CF) ratio of 39.5. Also, it posted a return on equity (ROE) of 9.10 per cent and a return on assets (ROA) of 7.8 per cent, as of December 21.

Descartes’s net income shot up by a whopping 92% YoY in Q3 FY2022

The Waterloo, Ontario-headquartered firm recorded a revenue of US$ 108.9 million in Q3 FY2022, up by 24 per cent YoY. This revenue growth was primarily due to service revenue of US$ 97.2 million, which reflected a YoY rise of 25 per cent.

The software tech provider, which holds a price-to-earnings (P/E) ratio of 80.7, reported diluted earnings per share of US$ 0.3 in the third quarter of fiscal 2022. The increased EPS was up by about 100 per cent YoY.

Descartes’ profit grew by a whopping 92 per cent YoY to US$ 25.5 million in Q3 FY2022.

It also generated US$ 43.3 million as cash from operating activities in the latest quarter, up by 31 per cent YoY.

Descartes Systems Group Inc (TSX:DSG)’s financial performance in Q3 FY2022

 Image source:© 2021 Kalkine Media®

Data source: Descartes Systems Group Inc

Bottom line

Descartes believes that logistics combined with the right technology can simplify multiple party and process challenges to deliver better customer service.

Amid the supply chain constrains many parts of the world are facing at the moment, such services can be helpful and, for that reason, see a surge in demand and sales.

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