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Strength Seen in Descartes Systems (DSGX): Can Its 5.4% Jump Turn into More Strength?

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Descartes Systems (DSGX - Free Report) shares ended the last trading session 5.4% higher at $61.67. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 5.5% loss over the past four weeks.

The increase in share price can be attributed to the company’s better-than-expected first quarter fiscal 2022 results.

Descartes reported fiscal first quarter earnings of 21 cents per share, which beat the Zacks Consensus Estimate by 10.5% and improved 62% on a year over year basis.

Revenues of $98.8 million beat the Zacks Consensus Estimate by 6.6%. The top line increased 18% on a year-over-year basis and 6% sequentially.

The top line benefited from continued strength in services revenues which improved 19% year over year and contributed 90% to total revenues.

Price and Consensus

Price Consensus Chart for DSGX

This logistics provider is expected to post quarterly earnings of $0.20 per share in its upcoming report, which represents a year-over-year change of +66.7%. Revenues are expected to be $94.5 million, up 12.4% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Descartes Systems, the consensus EPS estimate for the quarter has been revised 0.9% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on DSGX going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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