DSGR
Distribution Solutions Group, Inc.
$34.75
Platform & Compounding FCF
85%
Two-stage FCF DCF
Mild
·
Conviction
Overvalued
Trading 12.5% above fair value
You pay
$34.75
Bear
$12.41
Fair
$30.90
Bull
$52.28
Bear
$12.41
-64.3%
10% stage 1 growth, 11% discount
Fair
$30.90
-11.1%
17% stage 1 growth, 11% discount
Bull
$52.28
+50.4%
21% stage 1 growth, 11% discount
Adjust Assumptions
16.5%
11.0%
3.0%
Key Value Driver
FCF growth rate (17% base case)
Terminal Value % of EV
44%
Implied Market Multiple
38.1x
Market is pricing in (growth)
17.6%
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 $30.90 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