DSGR Stock Forecast & Price Target

Distribution Solutions Group Inc. demonstrated strong financial performance in Q2/25, with adjusted EBITDA rising 7.5% year-over-year to $48.6 million, surpassing both internal estimates and consensus expectations. Additionally, the company's revenue grew 14.3% year-over-year to $502.4 million, significantly exceeding forecasts, indicating robust sales momentum across its operating segments. The ongoing transformation of Lawson’s sales processes is also contributing positively, as evidenced by a 0.5% organic revenue increase when excluding military sales, further underpinning a favorable outlook for the company's financial prospects.

Distribution Solutions Group Inc has encountered revenue challenges primarily due to underperformance in its key TestEquity segment, which represents 39% of total revenue, showing a slight decline of 1.3% year-over-year linked to weaker sales trends resulting from customer uncertainty regarding economic conditions and tariff policies. Additionally, the Lawson Products segment, accounting for 25% of total revenue, also experienced a decrease of 1.0% year-over-year, driven by reduced military market demand amidst tightened government spending. The pressures on revenue have subsequently impacted the adjusted EBITDA margin, which has been affected by continuous investments in Lawson's sales transformation alongside the declining revenues from TestEquity.