Descartes Earnings: Long-Term Thesis Intact as Steady Results Continue

We maintain our $81 (CAD 111) fair value estimate for wide-moat Descartes, after the firm reported results in line with our expectations for adjusted EBITDA. The firm's core businesses have tailwinds, and we believe Descartes is well-positioned to capitalize on this as the year progresses. Furthermore, we continue to believe that the evolution of the supply chain toward greater complexity and increased exogenous shocks benefits Descartes, as proven over the last few years. The company is doing well to expand its business both organically and inorganically, completing two acquisitions in the quarter with a combined value of $140 million, in the trade compliance and regulatory arenas. We think these business additions fit well within the portfolio. Management provided second-quarter guidance that signals promising momentum as the shipping environment improves. Nonetheless, we view shares as overvalued.