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Distribution Solutions Group (DSGR)
NASDAQ:DSGR
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Distribution Solutions Group
(NASDAQ:DSGR)
Rating:65Neutral
Price Target:
$29.00
▲( 7.41% Upside)
Positive Factors
Revenue Growth
Q1/25 revenue increased 14.9% YOY to $478.0 million, with significant contributions from acquisitions.
Sales Performance
The Gexpro Services segment continued to be the standout performer with its average daily sales increasing 23% YOY on an organic basis.
Negative Factors
Military Sales Impact
Lawson Products segment revenue was down -10.9% YOY on an organic basis due to lower military orders and disruptions from a new order entry system.
Revenue Forecast
Revenue came in lower than internal forecasts and external estimates, with the downside variance primarily in the Canada Branch and TestEquity segment.
Distribution Solutions Group (DSGR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.25B
Dividend YieldN/A
Average Volume (3M)76.61K
Price to Earnings (P/E)1677.0
Beta (1Y)0.83
Revenue Growth13.91%
EPS GrowthN/A
CountryUS
Employees4,400
SectorIndustrials
Sector Strength90
IndustryIndustrial - Distribution
Share Statistics
EPS (TTM)0.07
Shares Outstanding46,438,340
10 Day Avg. Volume77,154
30 Day Avg. Volume76,607
Financial Highlights & Ratios
PEG Ratio8.52
Price to Book (P/B)1.86
Price to Sales (P/S)0.00
P/FCF Ratio45.85
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$39.00Price Target Upside44.44% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Distribution Solutions Group Business Overview & Revenue Model
Company DescriptionLawson Products, Inc. sells and distributes specialty products to the industrial, commercial, institutional, and government maintenance, repair, and operations market. It sells its products to customers in the United States, Puerto Rico, Canada, Mexico, and the Caribbean. The company was founded in 1952 and is headquartered in Chicago, Illinois.
How the Company Makes MoneyDSGR makes money primarily through the sale and distribution of industrial and construction supplies. The company sources products from manufacturers and sells them to businesses in need of these materials, earning revenue through the markup on these goods. Key revenue streams include direct sales to companies in industries such as manufacturing, construction, and logistics. Additionally, DSGR may have significant partnerships with manufacturers and suppliers that enable them to offer competitive pricing and ensure product availability. Factors such as long-term contracts with clients and an extensive distribution network further contribute to its earnings.
Distribution Solutions Group Financial Statement Overview
Summary
Distribution Solutions Group is performing well with substantial revenue growth and improving operational margins. The balance sheet reflects a solid financial structure, although return on equity remains a concern. Cash flow management is a strong point, with significant cash generation relative to reported earnings, positioning the company well for future growth and investment opportunities.Income Statement
Distribution Solutions Group has shown notable revenue growth, increasing from $1570M in 2023 to $1866M in TTM (Trailing-Twelve-Months), reflecting a strong demand in its industry. The Gross Profit Margin stands at 33.34%, indicating effective cost management. However, the Net Profit Margin is low at 0.06%, suggesting that operational expenses are high relative to revenue. The EBITDA Margin has improved to 5.89%, showing enhanced operational efficiency.70
Positive
Balance Sheet
The company's Debt-to-Equity Ratio is 0.24, indicating a moderate level of leverage and reliance on debt financing. The Equity Ratio is 36.11%, demonstrating a stable financial structure with a healthy proportion of assets funded by equity. However, the Return on Equity is low at 0.18%, reflecting challenges in generating returns for shareholders.65
Positive
Cash Flow
DSGR has shown strong Free Cash Flow growth, with a recent Free Cash Flow of $25.6M compared to $42.8M in the previous period, indicating effective cash management. The Operating Cash Flow to Net Income Ratio is favorable at 39.10, representing robust cash earnings relative to reported profits. The Free Cash Flow to Net Income Ratio is also strong at 22.22, showing efficient cash generation capabilities.75
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.87B | 1.80B | 1.57B | 1.15B | 417.73M | 351.59M | Gross Profit |
| 622.14M | 613.77M | 551.88M | 390.90M | 219.24M | 186.54M | EBIT |
| 85.43M | 55.95M | 42.99M | 41.79M | 4.45M | 14.74M | EBITDA |
| 109.86M | 55.95M | 104.36M | 82.42M | 30.68M | 28.14M | Net Income Common Stockholders |
| 1.15M | -7.33M | -8.97M | 7.41M | 9.41M | 15.11M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 65.44M | 66.48M | 83.93M | 24.55M | 4.18M | 28.39M | Total Assets |
| 1.76B | 1.73B | 1.55B | 1.22B | 256.16M | 256.30M | Total Debt |
| 865.83M | 831.09M | 649.05M | 461.97M | 27.21M | 10.31M | Net Debt |
| 800.39M | 764.61M | 565.12M | 437.42M | 23.03M | -18.09M | Total Liabilities |
| 1.13B | 1.09B | 888.73M | 652.62M | 123.15M | 133.88M | Stockholders Equity |
| 636.71M | 640.54M | 661.60M | 563.00M | 133.01M | 122.42M |
| Cash Flow | Free Cash Flow | ||||
| 25.61M | 42.77M | 77.61M | -31.13M | -2.74M | 30.84M | Operating Cash Flow |
| 45.08M | 56.45M | 102.29M | -11.03M | 5.45M | 32.53M | Investing Cash Flow |
| -218.73M | -229.68M | -278.52M | -126.69M | -41.19M | -3.99M | Financing Cash Flow |
| 170.88M | 159.30M | 250.41M | 148.46M | 10.66M | -5.77M |
Distribution Solutions Group Technical Analysis
Negative
27.00
Price Trends
27.08
Negative
29.45
Negative
33.46
Negative
Market Momentum
0.16
Negative
51.62
Neutral
65.52
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DSGR, the sentiment is Negative. The current price of 27 is above the 20-day moving average (MA) of 26.37, below the 50-day MA of 27.08, and below the 200-day MA of 33.46, indicating a neutral trend. The MACD of 0.16 indicates Negative momentum. The RSI at 51.62 is Neutral, neither overbought nor oversold. The STOCH value of 65.52 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DSGR.
Distribution Solutions Group Risk Analysis
Distribution Solutions Group disclosed 32 risk factors in its most recent earnings report. Distribution Solutions Group reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 2 New Risks
1.
The changes made in the third quarter of 2024 to our segment reporting structure could be confusing to investors and may not have the desired effects. Q4, 2024
2.
From time to time we may become subject to income tax audits, sales tax audits or similar proceedings, and as a result we may incur additional costs and expenses or owe additional taxes, interest and penalties that may negatively impact our operating results. Q4, 2024
Distribution Solutions Group Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $1.31B | 17.39 | 19.45% | ― | 11.94% | 34.08% | |
77 Outperform | $52.44B | 27.87 | 57.19% | 0.76% | 3.71% | 7.23% | |
74 Outperform | $1.04B | 17.06 | 22.15% | 3.73% | -0.79% | -13.64% | |
72 Outperform | $8.74B | 23.01 | 22.23% | 0.70% | 0.50% | 4.48% | |
69 Neutral | $4.53B | 21.38 | 15.53% | 4.28% | -5.71% | -31.93% | |
65 Neutral | $1.25B | 1,677.02 | 0.18% | ― | 13.91% | ― | |
64 Neutral | $4.39B | 11.81 | 5.17% | 249.38% | 3.98% | -12.17% |
* Industrials Sector Average
Performance Comparison
DSGR
Distribution Solutions Group
27.00
-9.32
-25.66%
AIT
Applied Industrial Technologies
223.24
28.88
14.86%
DXPE
DXP Enterprises
83.60
34.00
68.55%
MSM
MSC Industrial
79.06
-5.58
-6.59%
GIC
Global Industrial Company
26.38
-7.77
-22.75%
GWW
WW Grainger
1,078.14
119.43
12.46%
Distribution Solutions Group Earnings Call Summary
Earnings Call Date:May 01, 2025
(Q1-2025)
| % Change Since: 3.69%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong revenue growth, successful acquisitions, and improved EBITDA margins. However, challenges such as trade policy pressures, margin compression at Source Atlantic, and declines in military sales at Lawson Products were noted. The sentiment reflects a mix of positive achievements and significant challenges.Q1-2025 Updates
Positive Updates
Strong Revenue Growth
First quarter revenue reached $478 million, marking a 14.9% increase compared to the year-ago quarter. Organic average daily sales growth was 4.3%.
Successful Acquisitions Impact
The company completed five acquisitions in 2024, contributing significantly to the revenue, with $51 million from these acquisitions.
EBITDA Margin Improvement
Adjusted EBITDA for the first quarter grew to $42.8 million, an increase of 18.6% over the prior year, with the EBITDA margin rising to 9%, up 30 basis points from the year-ago period.
Lawson Products Sales Force Expansion
Lawson Products increased its sales reps from 830 to 910, with a goal of reaching 1,000 by the second half of 2025.
Gexpro Services Performance
Gexpro Services reported a net margin of 12.6%, an improvement over the previous quarter's 11%.
Negative Updates
Pressure from Trade Policies
The market is facing challenges due to new trade policies, impacting sourcing and causing anxiety among customers.
Source Atlantic Margin Compression
Source Atlantic reported a mid-single-digit EBITDA margin, pressured by market disruptions and integration challenges.
Lawson Products Military Sales Decline
Lawson Products experienced a decline in military sales, contributing to a 6.8% decrease in organic average daily sales from the prior year.
Currency Exchange Headwinds
Canadian operations faced headwinds due to currency exchange impacts, affecting sales performance.
Company Guidance
During the Distribution Solutions Group's first quarter 2025 earnings call, the company provided guidance indicating a cautiously optimistic outlook despite current market uncertainties. DSG reported a 14.9% increase in revenue, reaching $478 million, and an adjusted EBITDA of $42.8 million, representing a margin of 9%. The company highlighted its strategic initiatives to mitigate tariff impacts and leverage its sourcing capabilities, with less than 6% of its product spend sourced from China. DSG also emphasized its investments in expanding sales capabilities, aiming to grow its sales force to 1,000 reps by the second half of 2025, and reported repurchasing $11.2 million in shares during the first quarter. While some end markets remain challenging, DSG anticipates long-term benefits from reshaped trade patterns and strengthened domestic manufacturing, projecting continued EBITDA growth and margin expansion.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.