Financial Analysis: The Descartes Systems Group (NASDAQ:DSGX) & Microsoft (NASDAQ:MSFT)

Microsoft (NASDAQ:MSFT) and The Descartes Systems Group (NASDAQ:DSGX) are both computer and technology companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, dividends, earnings and risk.

Profitability

This table compares Microsoft and The Descartes Systems Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Microsoft	39.04%	32.34%	18.49%
The Descartes Systems Group	22.10%	10.57%	8.97%

Earnings & Valuation

This table compares Microsoft and The Descartes Systems Group”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Microsoft	$281.72 billion	10.53	$101.83 billion	$15.99	24.99
The Descartes Systems Group	$651.00 million	8.71	$143.27 million	$1.77	37.26

Microsoft has higher revenue and earnings than The Descartes Systems Group. Microsoft is trading at a lower price-to-earnings ratio than The Descartes Systems Group, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

71.1% of Microsoft shares are held by institutional investors. Comparatively, 77.7% of The Descartes Systems Group shares are held by institutional investors. 0.0% of Microsoft shares are held by insiders. Comparatively, 0.3% of The Descartes Systems Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility and Risk

Microsoft has a beta of 1.08, suggesting that its stock price is 8% more volatile than the S&P 500. Comparatively, The Descartes Systems Group has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Microsoft and The Descartes Systems Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Microsoft	0	4	39	2	2.96
The Descartes Systems Group	0	2	8	2	3.00

Microsoft presently has a consensus price target of $591.95, suggesting a potential upside of 48.14%. The Descartes Systems Group has a consensus price target of $114.20, suggesting a potential upside of 73.16%. Given The Descartes Systems Group’s stronger consensus rating and higher probable upside, analysts plainly believe The Descartes Systems Group is more favorable than Microsoft.

Summary

Microsoft beats The Descartes Systems Group on 9 of the 14 factors compared between the two stocks.

About Microsoft

Microsoft Corporation develops and supports software, services, devices and solutions worldwide. The Productivity and Business Processes segment offers office, exchange, SharePoint, Microsoft Teams, office 365 Security and Compliance, Microsoft viva, and Microsoft 365 copilot; and office consumer services, such as Microsoft 365 consumer subscriptions, Office licensed on-premises, and other office services. This segment also provides LinkedIn; and dynamics business solutions, including Dynamics 365, a set of intelligent, cloud-based applications across ERP, CRM, power apps, and power automate; and on-premises ERP and CRM applications. The Intelligent Cloud segment offers server products and cloud services, such as azure and other cloud services; SQL and windows server, visual studio, system center, and related client access licenses, as well as nuance and GitHub; and enterprise services including enterprise support services, industry solutions, and nuance professional services. The More Personal Computing segment offers Windows, including windows OEM licensing and other non-volume licensing of the Windows operating system; Windows commercial comprising volume licensing of the Windows operating system, windows cloud services, and other Windows commercial offerings; patent licensing; and windows Internet of Things; and devices, such as surface, HoloLens, and PC accessories. Additionally, this segment provides gaming, which includes Xbox hardware and content, and first- and third-party content; Xbox game pass and other subscriptions, cloud gaming, advertising, third-party disc royalties, and other cloud services; and search and news advertising, which includes Bing, Microsoft News and Edge, and third-party affiliates. The company sells its products through OEMs, distributors, and resellers; and directly through digital marketplaces, online, and retail stores. The company was founded in 1975 and is headquartered in Redmond, Washington.

About The Descartes Systems Group

The Descartes Systems Group Inc. provides cloud-based logistics and supply chain management solutions worldwide. Its Logistics Technology platform offers a range of modular, interoperable web and wireless logistics management solutions. The company provides a suite of solutions that include routing, mobile, and telematics; transportation management; ecommerce, shipping, and fulfillment; customs and regulatory compliance; global trade intelligence; broker and forwarder enterprise systems; and B2B messaging and connectivity services. It also offers its customers to use its modular, software-as-a-service, and data solutions to route, schedule, track, and measure delivery resources; plan, allocate, and execute shipments; rate, audit, and pay transportation invoices; access and analyze global trade data; research and perform trade tariff and duty calculations; file customs and security documents for imports and exports; and various other logistics processes. In addition, the company provides consulting, implementation, and training services, as well as maintenance and support services. It serves transportation providers, such as air, ocean, and truck modes; logistics service providers, including third-party logistics providers, freight forwarders, and customs brokers; and distribution-intensive companies, such as manufacturers, retailers, distributors, and mobile business service providers through subscription, transactional or perpetual license basis. The Descartes Systems Group Inc. was incorporated in 1981 and is headquartered in Waterloo, Canada.