One-glance verdict
Overvalued
$15.30 our estimate vs market $34.56
Wall Street consensus: $35.00 (128.7% higher than our fair-value estimate)
126% above our estimate, beyond the bull case
Fundamentals snapshot
Distribution Solutions Group, Inc.
DSGR · NMS · Industrials · Industrial Distribution
Current price
$34.56
52-week range
$19.02 - $34.83
Market cap
$1.60B
Balance sheet
Stretched
1.41x Concerning
Net debt $796.69M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
3 Risks
3 rewards · 3 risks
- Reward Revenue grew 0.9% last year.
- Reward Returns 0.9% on equity, ahead of 16% of its peers.
- Risk Stock trades 139.5% above its 5-year average P/E.
- Risk Net debt grew 73.1% over 3 years.
What this company does
Distribution Solutions Group, Inc.
Distribution Solutions Group acts as a vital middleman, selling and delivering a huge range of essential parts and equipment to other businesses like factories and aerospace companies. They provide everything from basic nuts and bolts to complex testing tools, and also help clients manage their own supply chain (the complex process of getting parts from the source to the factory floor). This is important because they handle the specialized logistics for thousands of small but crucial items, allowing other companies to operate smoothly and focus on their own products.
How the company got here
Distribution Solutions Group, or DSG, started as Lawson Products in 1952, a company focused on selling maintenance and repair parts. A major turning point came in 2022 when Lawson Products combined with two other companies, TestEquity and Gexpro Services. This merger created a much larger and more diverse company, leading to the name change to Distribution Solutions Group to reflect its broader scope. The goal was to bring together three specialized distributors to serve a wider range of industrial customers.
What it actually does
Think of DSG as a specialized superstore for businesses. They don't sell to everyday consumers, but instead provide a huge variety of products and services that other companies need to run their operations, make their products, and repair their equipment. This includes everything from tiny screws and fasteners to complex electronic testing equipment and safety gear. A key service they offer is managing inventory for their customers, which means they make sure businesses automatically get the parts they need, right when they need them, helping them operate more efficiently.
Lawson
This is the original part of the company and focuses on what's known as MRO (Maintenance, Repair, and Operations). It supplies all the small but essential items businesses need for daily upkeep, like fasteners, cutting tools, and chemicals. Their customers are diverse, ranging from government agencies to commercial and industrial businesses who pay for these products and for services that help manage their inventory. This segment also includes a brand called Kent Automotive, which specifically serves car dealerships and collision repair shops.
TestEquity
This segment is like a high-tech electronics shop for industries such as aerospace, defense, and automotive. It sells and rents sophisticated test and measurement equipment that engineers and technicians use to design and build electronic products. Beyond just the equipment, they also provide all the necessary supplies for electronic production, like soldering tools and adhesives. Customers in highly technical fields pay TestEquity for this specialized equipment and for related services like calibration and repair.
Gexpro Services
This part of the business focuses on managing the supply chain (the process of getting products from the manufacturer to the customer) for large manufacturers. They provide essential, often small, components that are critical for a company's production line. Gexpro Services helps these large manufacturing customers, including those in renewable energy and technology, by managing their inventory, bundling parts into kits, and handling global logistics to make their production more efficient.
Canada Branch Division
As the name suggests, this segment specifically serves the Canadian market. It acts as a wholesale distributor, providing a wide range of industrial supplies for maintenance, repair, and operations. Customers in Canada, including industrial, government, and commercial businesses, can get safety products, fasteners, power tools, and other necessary supplies through this division.
What management is betting on now
The company's main strategy is to continue growing by acquiring other companies and by expanding its existing businesses. They aim to be a one-stop-shop for their customers, offering a wide range of products and services to help businesses lower their overall costs and operate more efficiently. Management is also focused on cross-selling, which means getting a customer of one division, like Lawson, to also buy products or services from another division, like TestEquity. A key part of their plan is to let each of their main operating companies run independently to maintain their specialized expertise while benefiting from the financial strength and shared resources of the larger parent company.
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 Q2
$18.02M
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
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
Revenue
$439.54M
Net income
$1.90M
Diluted EPS
0.04
Operating cash flow
$21.39M
Free cash flow
$18.02M
Fetching…
Sources
Is it cheap or expensive?
Fair value $15.30 vs current price $34.56
Wall Street consensus is the average analyst price target: $35.00 (128.7% higher than our fair-value estimate).
Our most-likely fair value is $15.30 a share — about 55.7% below today's price of $34.56, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Stretched
Net debt $796.7M. Interest coverage 1.4x.
Net debt
$796.69M
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 $849.41M Interest coverage 1.41x This is the baseline the peer rows are being compared against.
Total debt $555.42M Interest coverage 12.99x +819% vs DSGR Carries about 9.2x more debt cushion than DSGR.
Total debt $365.30M Interest coverage 27.37x +1,836% vs DSGR Carries about 19.4x more debt cushion than DSGR.
Total debt $902.01M Interest coverage 2.92x +107% vs DSGR Carries about 2.1x more debt cushion than DSGR.
Total debt $99.20M Interest coverage 976.00x +68,928% vs DSGR Carries about 690.3x more debt cushion than DSGR.
What you should know
The case for and against DSGR
3 Rewards
3 Risks
Rewards
-
Revenue grew 0.9% last year.
-
Returns 0.9% on equity, ahead of 16% of its peers.
-
Free cash flow was positive in 8/10 years.
Risks
-
Stock trades 139.5% above its 5-year average P/E.
-
Net debt grew 73.1% over 3 years.
-
Insider ownership is only 1.2% (peer median: 18.0%).
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)
288.00x
Forward P/E
21.33x
P/B
2.46x
P/S
0.80x
EV/EBITDA
15.56x
PEG ratio
2.69x
Profitability
How much profit each dollar creates
Gross margin
33.1%
Operating margin
3.1%
Net margin
0.3%
ROE
0.9%
ROA
2.7%
Health
Liquidity and balance-sheet strength
Debt / equity
1.31x
Current ratio
2.63x
Quick ratio
1.19x
Total debt
$849.41M
Total cash
$52.73M
Growth
How the business has been compounding
Revenue TTM
$2.00B
Revenue 5Y CAGR
47.6%
EPS TTM
0.12
EPS 5Y CAGR
-4.8%
Cash flow
How much cash the business throws off
Operating CF TTM
$68.25M
Free CF TTM
$62.83M
FCF margin
3.1%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
2012-06-29