• If you are wondering whether Distribution Solutions Group at around US$29.67 offers good value today, you are not alone. This article is here to break that question down in plain terms.
• The share price has moved 5.9% over the last week and 1.6% over the last month, while the year to date return sits at 5.8% and the 1 year return at a 6.3% decline, with a 30.2% gain over 3 years providing longer term context.
• Recent company updates and corporate developments have kept Distribution Solutions Group on investors' radars, helping to explain some of the shorter term price movements. These updates provide useful context when you look at the mixed set of returns over different time frames.
• On Simply Wall St's 6 point valuation checklist, Distribution Solutions Group scores 4 out of 6. Next we will unpack what that means by walking through key valuation methods before finishing with a more comprehensive way to think about the company's value.

Approach 1: Distribution Solutions Group Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes estimates of the cash a company could generate in the future and discounts those cash flows back to today to arrive at an estimate of what the business might be worth per share right now.

For Distribution Solutions Group, Simply Wall St uses a 2 Stage Free Cash Flow to Equity model. The latest twelve month Free Cash Flow is about $74.7 million. Analyst inputs and extrapolated estimates point to Free Cash Flow reaching around $112.4 million in 2035. This is based on a path that includes projections such as $84 million in 2026 and $87 million in 2027, with later years extrapolated by Simply Wall St.

When all these projected cash flows are discounted back, the model arrives at an estimated intrinsic value of about $29.92 per share. Compared with the recent share price around $29.67, the DCF implies the stock is roughly 0.8% undervalued, which is a very small gap.

Result: ABOUT RIGHT

Distribution Solutions Group is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Approach 2: Distribution Solutions Group Price vs Sales

For Distribution Solutions Group, the preferred yardstick is the Price to Sales, or P/S, ratio. This is often useful when you want to compare companies on what the market is paying for each dollar of revenue, especially where earnings can be uneven or distorted by one off items.

In broad terms, higher expected growth and lower perceived risk tend to support a higher P/S multiple. Weaker growth prospects or higher risk usually point to a lower, more cautious range. That is why context matters when you look at where a company trades relative to its peers.

Distribution Solutions Group currently trades on a P/S of 0.69x. The Trade Distributors industry average sits at 1.34x, and the peer group average is 1.19x, so the stock is below both of these simple benchmarks. Simply Wall St also calculates a Fair Ratio of 1.20x, which is the P/S level it would expect given factors such as the company’s growth profile, profit margins, industry, market value and risk characteristics.

This Fair Ratio is designed to be more tailored than a straight comparison with peers or the industry because it adjusts for those company specific features. Setting the current 0.69x P/S against the 1.20x Fair Ratio suggests the shares trade below that customised reference point.

Result: UNDERVALUED

P/S ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1426 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Distribution Solutions Group Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, which are simply your story about a company combined with your numbers for future revenue, earnings, margins and the fair value you think that story supports.

A Narrative connects what you believe about Distribution Solutions Group, such as its competitive position or execution risks, to a financial forecast and then to a fair value. You can compare that fair value directly with today’s share price to help you decide whether to wait, add or trim.

On Simply Wall St, millions of investors share these Narratives on the Community page. The fair values linked to them update automatically when fresh information such as news, filings or earnings is added to the platform, so your story and numbers stay aligned without extra work.

For example, one investor in Distribution Solutions Group might build a Narrative that supports a higher fair value based on confident assumptions about future margins, while another might arrive at a lower fair value after using more cautious revenue estimates.

Do you think there's more to the story for Distribution Solutions Group? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.