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Distribution Solutions Group (DSGR)
NASDAQ:DSGR

Distribution Solutions Group (DSGR) AI Stock Analysis

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Distribution Solutions Group

(NASDAQ:DSGR)

Rating:65Neutral
Price Target:
$31.00
▲(8.32%Upside)
Distribution Solutions Group shows strong financial performance with notable revenue growth and cash flow management. The technical analysis indicates positive momentum, but the high P/E ratio suggests overvaluation concerns. The earnings call provided a balanced outlook with both positive achievements and challenges. The new CEO appointment is a positive strategic move.
Positive Factors
Merger and Diversification
Distribution Solutions Group was formed through the merger of Lawson Products, Gexpro Services, and TestEquity, creating a strong, diversified company in the industrial distribution space.
Sales Performance
The Gexpro Services segment continued to be the standout performer with its average daily sales increasing 23% YOY on an organic basis.
Technology Implementation
Lawson Products segment has implemented new CRM technology to enhance sales representatives' ability to win new customers and explore additional revenue opportunities.
Negative Factors
Order Delays
Lawson’s revenue was impacted throughout 2024 by order delays from military customers due to disruption from a new order entry system implemented by the government.
Revenue Shortfall
Revenue came in lower than internal forecasts and external estimates, with the downside variance primarily in the Canada Branch and TestEquity segment.
Sales Decline
The Lawson Products segment experienced a decline in organic average daily sales due to lower military sales and reduced sales representative headcount.

Distribution Solutions Group (DSGR) vs. SPDR S&P 500 ETF (SPY)

Distribution Solutions Group Business Overview & Revenue Model

Company DescriptionDistribution Solutions Group (DSGR) is a leading provider of distribution and supply chain solutions across various industries, including industrial, safety, and electrical sectors. The company focuses on delivering a wide range of products and services that enhance operational efficiency and reduce supply chain complexities for its clients. With a robust network and a commitment to innovation, DSGR caters to the needs of businesses seeking reliable distribution and logistics solutions.
How the Company Makes MoneyDistribution Solutions Group makes money through the sale of products and services related to distribution and supply chain management. Its revenue model primarily involves sourcing a diverse array of products, including industrial, safety, and electrical supplies, and distributing them to businesses across multiple sectors. The company leverages its extensive logistics network and expertise to offer value-added services, such as inventory management, just-in-time delivery, and customized supply chain solutions. Additionally, DSGR may engage in strategic partnerships with manufacturers and suppliers to enhance its product offerings and market reach, further contributing to its earnings.

Distribution Solutions Group Earnings Call Summary

Earnings Call Date:May 01, 2025
(Q1-2025)
|
% Change Since: 9.91%|
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.

Distribution Solutions Group Financial Statement Overview

Summary
Distribution Solutions Group has shown substantial revenue growth and improved operational margins. The balance sheet is stable with moderate leverage, but the low return on equity remains a concern. Strong cash flow management further supports the company's financial health.
Income Statement
70
Positive
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.
Balance Sheet
65
Positive
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.
Cash Flow
75
Positive
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.87B1.80B1.57B1.15B417.73M351.59M
Gross Profit622.14M613.77M551.88M390.90M219.24M186.54M
EBITDA109.86M55.95M104.36M82.42M30.68M28.14M
Net Income1.15M-7.33M-8.97M7.41M9.41M15.11M
Balance Sheet
Total Assets1.76B1.73B1.55B1.22B256.16M256.30M
Cash, Cash Equivalents and Short-Term Investments65.44M66.48M83.93M24.55M4.18M28.39M
Total Debt865.83M831.09M649.05M461.97M27.21M10.31M
Total Liabilities1.13B1.09B888.73M652.62M123.15M133.88M
Stockholders Equity636.71M640.54M661.60M563.00M133.01M122.42M
Cash Flow
Free Cash Flow25.61M42.77M77.61M-31.13M-2.74M30.84M
Operating Cash Flow45.08M56.45M102.29M-11.03M5.45M32.53M
Investing Cash Flow-218.73M-229.68M-278.52M-126.69M-41.19M-3.99M
Financing Cash Flow170.88M159.30M250.41M148.46M10.66M-5.77M

Distribution Solutions Group Technical Analysis

Technical Analysis Sentiment
Positive
Last Price28.62
Price Trends
50DMA
26.96
Positive
100DMA
27.80
Positive
200DMA
32.46
Negative
Market Momentum
MACD
0.23
Negative
RSI
61.59
Neutral
STOCH
80.53
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DSGR, the sentiment is Positive. The current price of 28.62 is above the 20-day moving average (MA) of 27.42, above the 50-day MA of 26.96, and below the 200-day MA of 32.46, indicating a neutral trend. The MACD of 0.23 indicates Negative momentum. The RSI at 61.59 is Neutral, neither overbought nor oversold. The STOCH value of 80.53 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 0 New Risks

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
79
Outperform
$1.42B18.7619.45%11.94%34.08%
AIAIT
75
Outperform
$9.22B24.2922.23%0.75%0.50%4.48%
GIGIC
75
Outperform
$1.08B17.6822.15%3.70%-0.79%-13.64%
MSMSM
72
Outperform
$5.03B25.4814.34%3.79%-4.11%-31.26%
GWGWW
72
Outperform
$49.73B26.4457.19%0.87%3.71%7.23%
65
Neutral
$1.33B1,777.330.18%13.91%
64
Neutral
kr64.07B12.511.54%9.83%0.04%-3.90%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
DSGR
Distribution Solutions Group
28.62
0.24
0.85%
AIT
Applied Industrial Technologies
245.19
57.07
30.34%
DXPE
DXP Enterprises
90.18
46.57
106.79%
MSM
MSC Industrial
89.61
15.49
20.90%
GIC
Global Industrial Company
28.09
-1.03
-3.54%
GWW
WW Grainger
1,035.28
129.99
14.36%

Distribution Solutions Group Corporate Events

Executive/Board ChangesBusiness Operations and Strategy
Distribution Solutions Group Appoints New CEO for TestEquity
Positive
Jul 2, 2025

On June 26, 2025, Distribution Solutions Group appointed Barry Litwin as the CEO of its subsidiary, TestEquity, effective July 14, 2025. Litwin, who previously led Global Industrial Company, brings extensive experience in industrial distribution and multi-channel strategies. His appointment is expected to drive TestEquity’s growth through enhanced digital channels and customer experience. The transition follows the tenure of Russ Frazee, who significantly expanded TestEquity’s operations and will continue in an advisory role to ensure a smooth leadership transition.

The most recent analyst rating on (DSGR) stock is a Buy with a $44.00 price target. To see the full list of analyst forecasts on Distribution Solutions Group stock, see the DSGR Stock Forecast page.

Shareholder Meetings
Distribution Solutions Group Holds Annual Stockholder Meeting
Neutral
May 27, 2025

On May 22, 2025, Distribution Solutions Group, Inc. held its 2025 Annual Meeting of Stockholders, where 96.1% of the eligible shares were represented. During the meeting, stockholders voted on three proposals: the election of directors to the Board, the ratification of Grant Thornton, LLP as the independent registered public accounting firm for 2025, and an advisory vote on executive compensation, all of which were approved.

The most recent analyst rating on (DSGR) stock is a Buy with a $44.00 price target. To see the full list of analyst forecasts on Distribution Solutions Group stock, see the DSGR Stock Forecast page.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jul 03, 2025