DSGR
Distribution Solutions Group, Inc.
$34.63
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 170.6% above fair value
You pay
$34.63
Bear
$1.39
Fair
$12.80
Bull
$25.99
Bear
$1.39
-96.0%
10% stage 1 growth, 11% discount
Fair
$12.80
-63.0%
17% stage 1 growth, 11% discount
Bull
$25.99
-24.9%
21% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (17% base case)
Terminal Value % of EV
44%
Implied Market Multiple
61.5x
Market is pricing in (growth)
23.9%
vs 16.5% base
Summary
Using a two-stage FCF DCF with 17% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $12.80 per share.
Warnings
Stock-based employee pay equals 80% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions