Valued at a market cap of $10.5 billion, The Descartes Systems Group (TSX: DSG) is a TSX tech stock down 30% from its all-time highs. Despite the ongoing pullback, Descartes has returned 370% to shareholders over the past decade, outpacing the TSX index’s 265% gain.
Let’s see why you should buy the dip in DSG stock right now.
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Is Descartes Systems a good stock to buy?
Descartes Systems Group provides cloud-based global logistics technology solutions, including routing, transportation management, e-commerce fulfillment, customs compliance, and trade intelligence.
The Waterloo-based company serves transportation providers, freight forwarders, customs brokers, retailers, and manufacturers through modular software-as-a-service platforms.
Descartes helps customers route shipments, manage deliveries, process customs documentation, analyze trade data, and streamline logistics operations.
In the third quarter (Q3) of 2025, Descartes Systems reported record revenue of US$187.7 million, an increase of 11% year over year, while adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) surged 19% to US$85.5 million.
Its strong Q3 results showcased how trade complexity and artificial intelligence are creating powerful tailwinds for the global logistics network operator. The company generated US$73 million in operating cash flow, while maintaining a debt-free balance sheet.
Services revenue grew 16% to US$173.7 million, accounting for 93% of total revenue, as organic services growth accelerated to 7% from 4% in each of the first two quarters.
The company benefited from strong demand across multiple business segments, including global trade intelligence, foreign trade zone solutions, e-commerce customs clearance, and real-time shipment visibility through its MacroPoint platform.
Trade and tariff uncertainty proved a key revenue driver as customers navigated rapidly changing regulations.
- Descartes capitalized on a complex global trade environment by providing timely tariff data, sanctioned party screening, and trade flow research that helped customers maintain business continuity.
- The elimination of the de minimis exemption for foreign e-commerce sellers shipping goods under US$800 to U.S. customers created substantial opportunities for Descartes.
- The company nearly doubled revenue in its Type 86 filing business within months as competitors struggled to handle massive transaction volumes.
- Descartes’s robust network infrastructure, built from processing millions of daily customs filings for FedEx, DHL, and UPS, allowed it to capture significant market share from software-only competitors.
Artificial intelligence is emerging as a transformative force across business operations. It deployed agentic AI agents that made over 300,000 outreach attempts to truck drivers, resulting in 180,000 new drivers joining the MacroPoint network.
This pushed MacroPoint’s truck-tracking rate to 90%, roughly 20 percentage points ahead of competitors, while generating higher revenue from happier customers who pay for complete shipment visibility.
Management announced plans for a normal-course issuer bid to repurchase shares, given depressed valuations despite strong operating performance. CFO Allan Brett will transition to an advisory role in March 2026, after 12 years with Descartes, and will be succeeded by Ed Gardner in accordance with the company’s established succession plan.
What is the DSG stock price target?
Analysts tracking the Canadian tech stock forecast revenue to increase from US$651 million in fiscal 2025 (ended in January) to US$1.08 billion in fiscal 2030. In this period, free cash flow is forecast to expand from US$212.5 million to US$437 million.
Currently, DSG stock is trading at 23 times forward FCF, which is below its 10-year average of 31.8 times. If the tech stock is priced at 25 times FCF, it could gain 45% over the next three years.
Given consensus price targets, Descartes Systems stock trades at a discount of 27% in January 2026.
