D2L (TSX:DTOL) Margin Strength Reinforces Bullish Narratives Despite Forecast Profit Decline

Latest Quarter Puts D2L's Profitability in Focus

D2L (TSX:DTOL) just posted Q3 2026 results with revenue of about $54.1 million and basic EPS of $0.08, keeping the spotlight firmly on how its earnings profile is evolving. The company has seen quarterly revenue move in a tight band around the low $50 million mark over the past year, while trailing 12 month EPS has climbed from $0.47 to $0.55 as net income reached about $30.2 million. With trailing net margins now sitting comfortably in the mid-teens, this print gives investors plenty to consider regarding how durable D2L's profitability is.

See our full analysis for D2L.

With the numbers on the table, the next step is to see how this latest earnings run rate compares with the dominant narratives around D2L's growth and profitability, and where it might be headed next.

See what the community is saying about D2L

Margins Climb to 14 percent on Trailing Basis

• Over the last 12 months D2L generated about $215 million in revenue and $30.2 million in net income, which works out to a 14 percent net profit margin compared with 3.2 percent a year earlier.
• Consensus narrative highlights AI driven products and operational efficiencies as margin supports, and the numbers show that against this backdrop:
  • Trailing net income climbed from $25.7 million to $30.2 million while revenue rose from about $205.3 million to $215.0 million, so profitability grew faster than sales.
  • With Q3 net income at $4.4 million on $54.1 million of revenue, recent quarterly profitability sits roughly in line with that higher trailing margin level rather than slipping back toward the older 3.2 percent range.

8.3 percent Revenue Growth vs Forecast Earnings Dip

• On a trailing 12 month basis revenue growth is running at about 8.3 percent per year, yet earnings are forecast to fall roughly 7.1 percent annually over the next three years even though the latest year saw earnings jump 370.4 percent.
• Analysts consensus view points to AI driven expansion and international growth as drivers, and the current numbers create a clear tension with the projected profit dip:
  • Trailing net income moved from $6.4 million to $30.2 million over the last year, but forecasts call for earnings of $14.9 million by around 2028, implying a step down from today despite that strong recent ramp.
  • Revenue is expected to keep growing around 8.1 to 8.3 percent annually, so the projected earnings decline depends on margins compressing from about 13.6 to 5.6 percent, which contrasts with the margin gains just reported.

Valuation Signals Upside to DCF Fair Value

• With the share price at $14.94, D2L trades below a DCF fair value estimate of about $30.62 and under an analyst price target of $21.77, while its trailing P E of 19.6 times sits under a 21.9 times peer average but above a 17 times wider industry level.
• What stands out for the bullish side is how the improved profitability lines up with those valuation markers:
  • Trailing net profit margin at 14 percent and five year earnings growth of 72.7 percent per year provide concrete support for a growth profile that is not fully reflected in a sub 20 times trailing P E multiple.
  • Given earnings of $30.2 million on the trailing view versus the $14.9 million level analysts project for around 2028, the current discount to the $30.62 DCF fair value depends heavily on whether margins stay closer to recent history or slide toward the lower forecast range.

Investors who want to see how these valuation gaps tie back into long term growth, risk, and narrative tension around AI and international expansion can dive deeper into the full community storyline for D2L. 📊 Read the full D2L Consensus Narrative.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for D2L on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

See the numbers from another angle? In just a few minutes you can turn that view into a full narrative, Do it your way.

A great starting point for your D2L research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

Explore Alternatives

Despite stronger recent margins and earnings, D2L faces a sharp forecast profit slowdown that clashes with its current valuation and growth narrative.

If that disconnect makes you uneasy, shift your focus to stable growth stocks screener (2095 results) instead. There, companies show steadier revenue and earnings trajectories that better align with long term expectations.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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