DSGR Stock Forecast & Price Target

Distribution Solutions Group Inc. demonstrated strong financial performance in Q2/25, with adjusted EBITDA increasing by 7.5% year-over-year to $48.6 million, surpassing estimates and consensus figures. The company reported a robust revenue growth of 14.3% year-over-year, reaching $502.4 million, which also exceeded market expectations. Notably, the Canada Branch revenue surged by 53.3%, driven by the Source Atlantic acquisition, while organic growth in the legacy Canada Branch business reached 6.5% year-over-year, indicating effective working capital management and operational improvements.

Distribution Solutions Group Inc. has exhibited a concerning decline in its Q3/25 adjusted EBITDA, which fell by 1.3% year-over-year to $48.5 million, underperforming both internal estimates and market consensus. The TestEquity segment, responsible for 39% of the company's revenue, is experiencing a similar downturn, with a 1.3% year-over-year drop attributed to weakened sales trends amid economic uncertainty and tariff concerns. Additionally, revenue from the Lawson Products segment has decreased by 1.0% organically due to reduced military sales resulting from stringent government spending, compounding pressures on the overall adjusted EBITDA margin due to a shift towards lower-margin offerings and competitive pricing strategies.