DXP Enterprises (DXPE) AI Stock Analysis

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DXP Enterprises

(NASDAQ:DXPE)

76Outperform

DXP Enterprises shows strong financial performance with consistent revenue growth and profitability improvements, supported by strategic acquisitions. The company's technical indicators suggest mixed momentum, with short-term weakness but long-term resilience. While the valuation is fair, the company's strategic focus on acquisitions and diversification, as discussed in the earnings call, positions it well for future growth, despite some operational challenges.

DXP Enterprises (DXPE) vs. S&P 500 (SPY)

Market Cap

$1.15B

Dividend YieldN/A

Average Volume (3M)173.09K

Price to Earnings (P/E)17.0

Beta (1Y)1.47

Revenue Growth7.35%

EPS Growth9.35%

CountryUS

Employees3,028

SectorIndustrials

Sector Strength61

IndustryIndustrial - Distribution

Share Statistics

EPS (TTM)4.23

Shares Outstanding15,695,088

10 Day Avg. Volume135,000

30 Day Avg. Volume173,091

Financial Highlights & Ratios

PEG Ratio1.82

Price to Book (P/B)N/A

Price to Sales (P/S)0.76

Price to Cash Flow (P/CF)10.60

P/FCF Ratio9.40

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$95.00

Price Target Upside16.64% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering1

DXP Enterprises Business Overview & Revenue Model

Company DescriptionDXP Enterprises, Inc., together with its subsidiaries, engages in distributing maintenance, repair, and operating (MRO) products, equipment, and services to the energy and industrial customers primarily in the United States and Canada. It operates through three segments: Service Centers (SC), Supply Chain Services (SCS), and Innovative Pumping Solutions (IPS). The SC segment offers MRO products, equipment, and integrated services, including technical expertise and logistics services. It offers a range of MRO products in the rotating equipment, bearing, power transmission, hose, fluid power, metal working, fastener, industrial supply, safety products, and safety services categories. This segment serves customers in the oil and gas, food and beverage, petrochemical, transportation, other general industrial, mining, construction, chemical, municipal, agriculture, and pulp and paper industries. The SCS segment manages procurement and inventory management solutions; and offers outsourced MRO solutions for sourcing MRO products, including inventory optimization and management, store room management, transaction consolidation and control, vendor oversight and procurement cost optimization, productivity improvement, and customized reporting services. Its programs include SmartAgreement, a procurement solution for various MRO categories; SmartBuy, an on-site or centralized MRO procurement solution; SmartSource, an on-site procurement and storeroom management solution; SmartStore, an e-Catalog solution; SmartVend, an industrial dispensing solution; and SmartServ, an integrated service pump solution. The IPS segment fabricates and assembles custom-made pump packages, remanufactures pumps, and manufactures branded private label pumps. The company was founded in 1908 and is based in Houston, Texas.

How the Company Makes MoneyDXP Enterprises generates revenue primarily through the distribution of industrial products and services across its three main business segments. In the Service Centers segment, DXP sells a diverse portfolio of maintenance, repair, and operating (MRO) products directly to customers, ensuring the continuous operation of their facilities. The Supply Chain Services segment provides outsourced procurement and inventory management solutions, allowing clients to streamline their operations and reduce costs. Innovative Pumping Solutions focuses on custom engineering and fabrication of pump packages, targeting industries such as oil and gas, petrochemicals, and water management. DXP's earnings are bolstered by its ability to provide comprehensive solutions and maintain strategic partnerships with top manufacturers, which enhances its product offerings and market reach.

DXP Enterprises Financial Statement Overview

Summary

DXP Enterprises exhibits strong financial health with robust revenue growth and improving profitability margins. The company's balance sheet shows reduced leverage and a solid equity position. Cash flow generation remains strong, despite a slight decline in free cash flow.

Income Statement

Very Positive

DXP Enterprises has shown consistent revenue growth, with a 7.35% increase from 2023 to 2024 and a 13.36% increase from 2022 to 2023. The gross profit margin improved slightly from 30.10% in 2023 to 30.87% in 2024, indicating efficient cost management. Net profit margin also increased from 4.10% in 2023 to 3.90% in 2024, reflecting improved profitability. EBIT and EBITDA margins are stable, showcasing operational efficiency.

Balance Sheet

Positive

The debt-to-equity ratio improved significantly from 1.51 in 2023 to 0.13 in 2024, indicating better financial leverage. Return on Equity (ROE) also increased from 18.06% in 2023 to 16.64% in 2024, showing effective use of equity to generate profits. The equity ratio improved from 32.35% in 2023 to 31.33% in 2024, suggesting a stronger equity base.

Cash Flow

Very Positive

Free cash flow growth rate decreased by 17.89% from 2023 to 2024, but the company maintained a strong operating cash flow to net income ratio of 1.45 in 2024, indicating solid cash generation relative to earnings. Free cash flow to net income ratio is high at 1.10, reflecting strong cash conversion.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
1.80B	1.68B	1.48B	1.11B	1.01B
	Gross Profit
556.28M	505.29M	422.04M	328.51M	279.27M
	EBIT
145.38M	139.32M	64.69M	13.13M	10.26M
	EBITDA
182.30M	169.43M	123.54M	67.41M	-5.06M
	Net Income Common Stockholders
70.40M	68.81M	48.16M	16.50M	-29.07M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
148.32M	173.12M	46.03M	48.99M	117.35M
	Total Assets
1.35B	1.18B	1.04B	906.19M	851.86M
	Total Debt
54.67M	575.97M	471.85M	376.82M	374.34M
	Net Debt
-93.64M	402.85M	425.82M	327.83M	256.99M
	Total Liabilities
926.71M	796.56M	671.89M	547.50M	504.00M
	Stockholders Equity
422.79M	380.88M	365.39M	358.64M	347.07M
Cash Flow		Free Cash Flow
77.14M	93.96M	978.00K	31.09M	101.00M
	Operating Cash Flow
102.21M	106.22M	5.89M	37.09M	107.67M
	Investing Cash Flow
-181.69M	-22.65M	-53.42M	-69.02M	-121.80M
	Financing Cash Flow
56.80M	43.58M	44.31M	-38.49M	77.41M

DXP Enterprises Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price81.45

Price Trends

50DMA

89.28

Negative

100DMA

85.86

Negative

200DMA

68.62

Positive

Market Momentum

MACD

-1.64

Negative

RSI

42.48

Neutral

STOCH

16.74

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DXPE, the sentiment is Neutral. The current price of 81.45 is below the 20-day moving average (MA) of 82.81, below the 50-day MA of 89.28, and above the 200-day MA of 68.62, indicating a neutral trend. The MACD of -1.64 indicates Negative momentum. The RSI at 42.48 is Neutral, neither overbought nor oversold. The STOCH value of 16.74 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for DXPE.

DXP Enterprises Risk Analysis

DXP Enterprises disclosed 37 risk factors in its most recent earnings report. DXP Enterprises reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

DXP Enterprises Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DXPE	76 Outperform	$1.15B	16.98	17.54%	―	7.35%	9.35%
AIT	74 Outperform	$7.99B	21.08	22.70%	0.76%	0.37%	3.52%
MSM	68 Neutral	$3.91B	18.47	15.53%	4.79%	-5.71%	-31.93%
GIC	68 Neutral	$819.86M	13.56	22.49%	4.72%	3.26%	-14.20%
EVI	66 Neutral	$232.54M	37.43	4.73%	―	-1.93%	-0.69%
Sector *	62 Neutral	$7.67B	13.25	3.04%	3.47%	3.63%	-13.99%
DSGR	60 Neutral	$1.17B	760.60	-1.13%	―	14.88%	9.87%

* Industrials Sector Average

Performance Comparison

DXPE

DXP Enterprises

81.45

25.78

46.31%

AIT

Applied Industrial Technologies

231.97

40.97

21.45%

EVI

EVI Industries

18.23

-4.38

-19.37%

DSGR

Distribution Solutions Group

27.04

-7.29

-21.24%

MSM

MSC Industrial

75.18

-13.84

-15.55%

GIC

Global Industrial Company

22.33

-18.89

-45.83%

DXP Enterprises Earnings Call Summary

Earnings Call Date: Mar 6, 2025 | % Change Since: 3.82% | Next Earnings Date: May 8, 2025

Earnings Call Sentiment Positive

DXP Enterprises reported a strong fiscal year 2024 with record sales and significant growth in key segments, particularly through acquisitions and diversification strategies. Despite some challenges in Supply Chain Services and increased operating expenses, the company maintained strong margins and cash flow, positioning itself well for future growth.

Highlights

Record Sales and Growth

DXP Enterprises achieved record sales growth in fiscal year 2024, with a 7.4% increase to $1.8 billion. Innovative Pumping Solutions led the way with a 47.7% year-over-year increase.

Improved Gross and EBITDA Margins

Gross profit margins increased by 77 basis points to 30.9%, and adjusted EBITDA margins remained above 10% for the second consecutive year, reaching 10.62%.

Successful Acquisitions and Diversification

DXP completed 7 acquisitions in fiscal 2024, contributing significantly to sales growth and diversification, particularly in the water and wastewater sectors.

Strong Free Cash Flow and ROIC

Generated $77 million in free cash flow and achieved a return on invested capital (ROIC) of 39%, demonstrating strong financial management.

Debt Refinancing and Share Repurchase

Successfully refinanced Term Loan B, reducing interest costs by 100 basis points, and repurchased $28.8 million in shares.

Positive Sales Trends

Sales per business day improved throughout the year, concluding Q4 with $7.595 million per day, and continued strong sales into Q1 2025.

Lowlights

Challenges in Supply Chain Services

Supply Chain Services experienced a slight decline of 1.5% year-over-year, primarily due to customer facility closures and declines in energy-related sites.

Increased SG&A Expenses

SG&A expenses increased by $44.3 million from fiscal 2023 to $410.9 million, reflecting growth-related costs and compensation.

Impact of Inflation and Tariffs

Potential headwinds from tariffs and inflationary pressures were mentioned, although DXP has strategies to mitigate their impact.

Company Guidance

In the DXP Enterprises Fourth Quarter 2024 Earnings Release Conference Call, a range of financial metrics and strategies were discussed by CEO David Little and CFO Kent Yee. The company achieved a record fiscal year with sales rising by 7.4% to $1.8 billion and adjusted EBITDA reaching $191 million, marking the second fiscal year with adjusted EBITDA margins over 10%, specifically 10.62%. Gross profit margins improved by 77 basis points to 30.9%, while operating income increased by 4.8%. Key growth drivers included Innovative Pumping Solutions, which saw a 47.7% increase, and strategic acquisitions, with seven completed in 2024. DXP's end-market diversification was emphasized, with oil and gas comprising 23% of the business, and the water and wastewater sector growing to 44% of Innovative Pumping Solutions sales. The company's focus on capital allocation and growth through acquisitions was supported by refinancing efforts that raised $105 million and reduced interest costs by 100 basis points. Looking forward, DXP aims to maintain high margins and continue growing both organically and through further acquisitions, anticipating a strong performance in fiscal 2025.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.