Analyzing QAD (NASDAQ:QADB) and The Descartes Systems Group (DSGX)

The Descartes Systems Group (NASDAQ: DSGX) and QAD (NASDAQ:QADB) are both small-cap computer and technology companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, dividends, profitabiliy, analyst recommendations, institutional ownership, risk and valuation.

Analyst Recommendations

This is a summary of recent ratings and target prices for The Descartes Systems Group and QAD, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The Descartes Systems Group 0 2 7 0 2.78
QAD 0 0 1 0 3.00

The Descartes Systems Group currently has a consensus target price of $33.00, suggesting a potential upside of 30.69%. QAD has a consensus target price of $33.00, suggesting a potential upside of 30.95%. Given QAD’s stronger consensus rating and higher possible upside, analysts plainly believe QAD is more favorable than The Descartes Systems Group.

Volatility & Risk

The Descartes Systems Group has a beta of 0.57, meaning that its share price is 43% less volatile than the S&P 500. Comparatively, QAD has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500.

Valuation & Earnings

This table compares The Descartes Systems Group and QAD’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
The Descartes Systems Group $209.38 million 9.16 $70.06 million $0.33 76.52
QAD $283.96 million 1.69 $10.09 million ($0.85) -29.65

The Descartes Systems Group has higher revenue, but lower earnings than QAD. QAD 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.

Institutional and Insider Ownership

77.5% of The Descartes Systems Group shares are owned by institutional investors. Comparatively, 1.9% of QAD shares are owned by institutional investors. 0.3% of The Descartes Systems Group shares are owned by insiders. Comparatively, 67.4% of QAD shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

QAD pays an annual dividend of $0.24 per share and has a dividend yield of 1.0%. The Descartes Systems Group does not pay a dividend. QAD pays out -28.2% of its earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
The Descartes Systems Group 11.80% 5.78% 4.99%
QAD -5.49% 1.22% 0.54%

Summary

The Descartes Systems Group beats QAD on 8 of the 15 factors compared between the two stocks.

The Descartes Systems Group Company Profile

Descartes Systems Group Inc (Descartes) is a Canada-based global provider of federated network and global logistics technology solutions that help its customers make and receive shipments and manage related resources. The Company’s network-based solutions, which primarily consist of services and software, connect people to their trading partners and enable business document exchange (bookings, bills of lading, status messages); regulatory compliance and customs filing; route and resource planning, execution and monitoring; access and leverage global trade and restricted party data; inventory and asset visibility; rate and transportation management, and warehouse operations. The Company’s solutions include Logistics Technology Platform that fuses the Descartes Global Logistics Network (Descartes GLN); customs and regulatory compliance; routing, mobile and telematics; global logistics network services; transportation management, and broker and forwarder enterprise systems.

QAD Company Profile

QAD Inc. (QAD) is a provider of vertically oriented enterprise software solutions for global manufacturing companies across the automotive, life sciences, consumer products, food and beverage, high technology and industrial products industries. QAD Enterprise Applications enables measurement and control of business processes and supports operational requirements, including financials, manufacturing, demand and supply chain planning, customer management, business intelligence and business process management. QAD delivers components of its solution for a range of mobile platforms. The Company’s mobile suite includes a requisition approval solution, a mobile business intelligence solution, mobile browse capability and mobile application monitoring tools to support system administrators. Its mobile browse capability allows users to view, filter and sort data accessible through QAD Browses within QAD Enterprise Applications using mobile devices.

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