One-glance verdict
Within fair range
$24.32 our estimate vs market $34.79
Wall Street consensus: $35.00 (43.9% higher than our fair-value estimate)
43% above our estimate
Fundamentals snapshot
Distribution Solutions Group, Inc.
DSGR · NMS · Industrials · Industrial Distribution
Current price
$34.79
52-week range
$19.02 - $35.06
Market cap
$1.61B
Balance sheet
Stretched
1.41x Concerning
Net debt $778.54M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
3 Risks
2 rewards · 3 risks
- Reward Revenue grew 3.7% last year.
- Reward Free cash flow was positive in 8/10 years.
- Risk Net debt grew 73.1% over 3 years.
- Risk Stock trades 52.3% above its 5-year average P/E.
What this company does
Distribution Solutions Group, Inc.
Distribution Solutions Group acts as a specialty supplier, providing the essential parts, tools, and testing equipment that other industrial businesses need to keep their operations running. The company makes money by selling these critical items and managing its customers' supply chain (the entire process of getting parts from the source to the factory floor). This service is vital because it helps prevent costly production delays for its customers by making sure they always have the specific components they need.
How the company got here
Distribution Solutions Group, or DSG, was formed in 2022 through the combination of three separate companies: Lawson Products, TestEquity, and Gexpro Services. Lawson Products, which dates back to 1952, was a long-established distributor of maintenance and repair supplies. The strategic merger brought these three specialized distribution businesses under one new corporate name, Distribution Solutions Group, Inc., to reflect its bigger and more diverse operations. This move created a larger, multi-platform company better positioned to serve a wider range of industrial customers.
What it actually does
Think of DSG as a specialized superstore for businesses, providing all the essential bits and pieces they need to keep their operations running smoothly. They don't sell to everyday consumers, but instead supply other companies with everything from tiny screws and safety gloves to complex electronic testing equipment. DSG focuses on being a high-touch distributor, which means they offer a lot of expert support and services, like managing inventory for their customers, to help them be more efficient. The company serves a huge variety of industries, including manufacturing, aerospace, technology, and government.
Lawson
This is the original and oldest part of the company, focused on what's known as MRO, or maintenance, repair, and operations. Essentially, Lawson provides all the small but critical supplies that businesses need for daily upkeep, like fasteners, chemicals, and cutting tools. Their customers are typically maintenance crews in factories, government facilities, and commercial buildings. A key service they offer is vendor-managed inventory (VMI), where they go to a customer's site and restock their supply cabinets, ensuring they never run out of essential parts.
TestEquity
This segment is the technology expert of the group, distributing sophisticated test and measurement equipment and electronic production supplies. Their customers are engineers and technicians in high-tech industries like aerospace, defense, and semiconductors who need precise tools for designing, building, and repairing electronics. Beyond just selling equipment, TestEquity also offers services like equipment rental, calibration (making sure instruments are accurate), and custom tool kits. This part of the business represents a significant portion of the company's revenue, around half according to one 2023 analysis.
Gexpro Services
Gexpro Services acts as a supply chain (the entire process of making and selling goods) manager for large manufacturers, known as original equipment manufacturers (OEMs). Instead of just selling parts, they provide complete solutions to help these large companies manage their production lines more efficiently. This includes services like bundling parts into kits for assembly (kitting), managing global logistics, and ensuring quality control. They handle the flow of small but essential components for big-name manufacturers in industries like renewable energy and transportation.
Canada Branch Division
As the name suggests, this segment focuses specifically on the Canadian market, distributing a wide range of industrial supplies. It serves a broad customer base including industrial, government, and commercial contractors across Canada. This division provides many of the same types of MRO products as the Lawson segment, such as safety products, fasteners, and power tools, but is organized to cater directly to Canadian businesses. The company has been actively expanding its presence in Canada through strategic acquisitions.
What management is betting on now
DSG's main strategy is to grow by acquiring other complementary distribution companies and by selling more products and services to its existing customers. Management is focused on leveraging the strengths of its different operating companies, allowing them to share resources and expertise while still running independently day-to-day. They are also investing in technology and e-commerce to make it easier for business customers to order and manage their supplies. A key priority is expanding their more embedded, service-rich offerings, like inventory management programs, which create stickier, long-term customer relationships.
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$-20.54M
FY2024 Q4
$41.12M
FY2025 Q1
$-10.41M
FY2025 Q2
$28.66M
FY2025 Q3
$32.86M
FY2025 Q4
$11.72M
FY2026 Q1
$-23.72M
FY2026 Q2
$16.44M
Revenue
$557.73M
Net income
$8.49M
Diluted EPS
0.18
Operating cash flow
$21.98M
Free cash flow
$16.44M
Fetching…
Sources
Revenue
$496.00M
Net income
$382.00K
Diluted EPS
0.01
Operating cash flow
$-20.36M
Free cash flow
$-23.72M
Fetching…
Sources
Revenue
$481.60M
Net income
$-6.37M
Diluted EPS
-0.14
Operating cash flow
$16.94M
Free cash flow
$11.72M
Fetching…
Sources
Revenue
$517.96M
Net income
$6.45M
Diluted EPS
0.14
Operating cash flow
$38.37M
Free cash flow
$32.86M
Fetching…
Sources
Revenue
$502.44M
Net income
$5.00M
Diluted EPS
0.11
Operating cash flow
$33.30M
Free cash flow
$28.66M
Fetching…
Sources
Revenue
$478.03M
Net income
$3.26M
Diluted EPS
0.07
Operating cash flow
$-4.76M
Free cash flow
$-10.41M
Fetching…
Sources
Revenue
$480.46M
Net income
$-25.93M
Diluted EPS
-0.55
Operating cash flow
$45.72M
Free cash flow
$41.12M
Fetching…
Sources
Revenue
$468.02M
Net income
$21.92M
Diluted EPS
0.46
Operating cash flow
$-17.27M
Free cash flow
$-20.54M
Fetching…
Sources
Is it cheap or expensive?
Fair value $24.32 vs current price $34.79
Wall Street consensus is the average analyst price target: $35.00 (43.9% higher than our fair-value estimate).
Our most-likely fair value is $24.32 a share — about 30.1% away from today's price of $34.79, so the stock currently looks fairly priced.
Is it drowning in debt?
Stretched
Net debt $778.5M. Interest coverage 1.4x.
Net debt
$778.54M
Interest coverage
1.41x
Distribution Solutions Group, Inc.'s profit covers its interest bill about 1.4 times over. which is weaker than most peers shown here.
Stretched
Worse cushion
Baseline
Better cushion
DSGR
BASELINE
Distribution Solutions Group, Inc.
Total debt $845.47M Interest coverage 1.41x This is the baseline the peer rows are being compared against.
Total debt $899.00M Interest coverage 2.92x +107% vs DSGR Carries about 2.1x more debt cushion than DSGR.
Total debt $555.42M Interest coverage 12.99x +819% vs DSGR Carries about 9.2x more debt cushion than DSGR.
Total debt $483.44M Interest coverage 31.60x +2,135% vs DSGR Carries about 22.4x more debt cushion than DSGR.
Total debt $6.71B Interest coverage 3.19x +126% vs DSGR Carries about 2.3x more debt cushion than DSGR.
What you should know
The case for and against DSGR
2 Rewards
3 Risks
Rewards
-
Revenue grew 3.7% last year.
-
Free cash flow was positive in 8/10 years.
Risks
-
Net debt grew 73.1% over 3 years.
-
Stock trades 52.3% above its 5-year average P/E.
-
Insider ownership is only 1.2% (peer median: 9.8%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
183.11x
Forward P/E
19.82x
P/B
2.46x
P/S
0.78x
EV/EBITDA
15.24x
PEG ratio
2.69x
Profitability
How much profit each dollar creates
Gross margin
32.7%
Operating margin
5.5%
Net margin
0.4%
ROE
1.4%
ROA
2.8%
Health
Liquidity and balance-sheet strength
Debt / equity
1.29x
Current ratio
2.54x
Quick ratio
1.22x
Total debt
$845.47M
Total cash
$66.94M
Growth
How the business has been compounding
Revenue TTM
$2.05B
Revenue 5Y CAGR
47.6%
EPS TTM
0.19
EPS 5Y CAGR
-4.8%
Cash flow
How much cash the business throws off
Operating CF TTM
$56.94M
Free CF TTM
$62.83M
FCF margin
3.1%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
2012-06-29