DSGR Stock Forecast & Price Target

Distribution Solutions Group Inc demonstrated a strong performance in Q2/25, with adjusted EBITDA rising 7.5% year-over-year to $48.6 million, surpassing both internal estimates and consensus forecasts. The company's overall revenue also reflected robust growth, increasing 14.3% year-over-year to $502.4 million, driven significantly by a 53.3% surge in revenue from the Canada Branch, particularly following the Source Atlantic acquisition. Furthermore, the ongoing improvement in operating cash flow, supported by effective working capital management and organic revenue growth from the legacy Bolt Supply business, underlines a positive trajectory for the company's financial health.

Distribution Solutions Group Inc. is facing a negative outlook primarily due to a slight decline in adjusted EBITDA, which fell by 1.3% year-over-year to $48.5 million, underperforming both internal estimates and consensus expectations. The TestEquity segment, a significant revenue contributor at 39% of the total, experienced a similar 1.3% year-over-year revenue decline, attributed to weakening sales trends amidst economic uncertainty and tariff-related concerns. Additionally, pressures on adjusted EBITDA margin resulted from ongoing investments in the Lawson segment's sales transformation and a shift toward lower-margin products in the TestEquity segment, further compounding the company's financial challenges.