DXP Enterprises (DXPE) AI Stock Analysis

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DXP Enterprises

(NASDAQ:DXPE)

Rating:79Outperform

Price Target:

$103.00

▲(14.22%Upside)

DXP Enterprises has a strong financial performance with robust revenue growth and profitability, supported by positive earnings call highlights. The technical indicators show bullish momentum, although caution is advised due to potential overbought conditions. The valuation is fair, but the lack of a dividend yield may deter some investors. Overall, the stock demonstrates solid potential for growth, with some areas for improvement in cash flow management.

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

Market Cap

$1.42B

Dividend YieldN/A

Average Volume (3M)127.10K

Price to Earnings (P/E)18.8

Beta (1Y)1.45

Revenue Growth11.94%

EPS Growth34.08%

CountryUS

Employees3,028

SectorIndustrials

Sector Strength86

IndustryIndustrial - Distribution

Share Statistics

EPS (TTM)1.26

Shares Outstanding15,694,140

10 Day Avg. Volume217,606

30 Day Avg. Volume127,101

Financial Highlights & Ratios

PEG Ratio0.05

Price to Book (P/B)1.40

Price to Sales (P/S)0.00

P/FCF Ratio524.83

Enterprise Value/Market Cap0.66

Enterprise Value/Revenue0.13

Enterprise Value/Gross Profit1.61

Enterprise Value/Ebitda1.32

Forecast

1Y Price Target

$95.00

Price Target Upside5.34% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering1

DXP Enterprises Business Overview & Revenue Model

Company DescriptionDXP Enterprises, Inc. (DXPE) is a leading distributor of products and services for maintenance, repair, and operations (MRO) in the industrial sector. Founded in 1908 and headquartered in Houston, Texas, DXP Enterprises operates across multiple sectors, including industrial, energy, and water and wastewater. The company offers a comprehensive range of products such as bearings and power transmission, metalworking, industrial supplies, and safety products. Additionally, it provides integrated supply chain management solutions and technical expertise to help businesses optimize their operations.

How the Company Makes MoneyDXP Enterprises makes money through the distribution of a wide range of industrial products and the provision of related services. The company's revenue model is primarily based on the sale of products such as bearings, power transmission components, metalworking tools, industrial supplies, and safety equipment. DXP Enterprises also generates revenue by offering value-added services, including integrated supply chain management, inventory management, and maintenance solutions. Furthermore, the company benefits from strategic partnerships with key manufacturers and suppliers, enhancing its product offerings and market reach. The combination of product sales and service contracts allows DXP Enterprises to maintain a diversified revenue stream and cater to a broad customer base across various industries.

DXP Enterprises Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q1-2025)

% Change Since: 1.58%|

Next Earnings Date:Aug 07, 2025

Earnings Call Sentiment Positive

The earnings call reflects a strong start to 2025 with significant sales growth and successful acquisition strategies. While there are concerns about tariff impacts and increased working capital affecting cash flow, the company remains optimistic about continued growth and market resilience.

Q1-2025 Updates

Positive Updates

Strong Financial Performance

First quarter adjusted EBITDA of $52.5 million and adjusted diluted earnings per share of $1.26, supported by year-over-year sales growth of 15.5% and sequential sales growth of 1.2%.

Successful Acquisition Strategy

DXP closed one acquisition in the first quarter, Arroyo Process Equipment, contributing $31.1 million in sales. Two additional acquisitions are anticipated by the end of the second quarter.

Innovative Pumping Solutions Growth

Innovative Pumping Solutions led sales growth at 38.5% year-over-year, driven by strength in DXP Water and an increase in energy backlog.

Service Centers Sales Record

Service Centers established a new high water mark with sales at $327 million, growing 13.4% year-over-year.

Gross Margin Improvement

Gross margins improved by 151 basis points to 31.5% year-over-year, reflecting strong segment performance and favorable acquisition contribution.

Negative Updates

Tariff Uncertainty

Rising uncertainty around tariffs could impact demand, with concerns over potentially high tariffs like 145% affecting purchasing decisions.

Working Capital Increase

Working capital increased by $34.3 million, with accounts receivable growing and DSO days increasing to 70 days.

Negative Free Cash Flow

Cash flow from operations was $3 million in Q1, significantly lower than $27 million in Q1 of the previous year, mainly due to increased receivables and deferred tax payments.

Company Guidance

During the first quarter of fiscal year 2025, DXP Enterprises reported strong financial performance, highlighting key metrics such as an adjusted EBITDA of $52.5 million and adjusted diluted earnings per share of $1.26. The company achieved a year-over-year sales growth of 15.5% and a sequential sales growth of 1.2%, with total sales reaching $476.6 million. Organic growth contributed 11.1% year-over-year, bolstered by acquisitions contributing $31.1 million in sales. Notably, the Innovative Pumping Solutions segment grew by 38.5% year-over-year, Service Centers by 13.4%, and Supply Chain Services by 2.1%. The company also closed one acquisition, Arroyo Process Equipment, during the quarter, as part of its strategy to diversify and expand its market reach. Despite macroeconomic challenges such as tariffs, DXP maintained robust demand across its broad industrial markets, with an average daily sales rate of $7.6 million per business day. The company reported a gross margin improvement of 151 basis points to 31.5% and continues to focus on strategic investments to drive long-term shareholder value.

DXP Enterprises Financial Statement Overview

Summary

DXP Enterprises demonstrates strong financial health with robust revenue growth and profitability. The company has a moderate debt level and stable equity base, though there is room to improve cash flow management, particularly in free cash flow generation.

Income Statement

Very Positive

DXP Enterprises has shown strong revenue growth with a 10.8% increase from 2023 to the TTM period. The gross profit margin stands at an impressive 31.2%, indicating efficient cost management. Net profit margin also improved to 4.3%, reflecting enhanced profitability. The EBIT and EBITDA margins are healthy at 8.4% and 10.4% respectively, showcasing strong operational performance.

Balance Sheet

Positive

The company's debt-to-equity ratio is 1.55, indicating moderate leverage. The return on equity (ROE) is 17.9%, which is attractive and suggests effective use of equity capital. Equity ratio at 32.2% reflects a stable financial structure, although there is room for improvement in reducing debt levels.

Cash Flow

Positive

Operating cash flow to net income ratio is 0.98, showing effective cash generation relative to net income. However, free cash flow has decreased, with a free cash flow growth rate of -53.2% from 2023 to TTM. The free cash flow to net income ratio is 0.45, indicating some pressure on free cash generation.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.87B	1.80B	1.68B	1.48B	1.11B	1.01B
Gross Profit	582.66M	556.28M	505.29M	422.04M	328.51M	279.27M
EBITDA	194.63M	182.30M	169.43M	123.54M	67.41M	-5.06M
Net Income	79.75M	70.49M	68.81M	48.16M	16.50M	-29.07M
Balance Sheet
Total Assets	1.38B	1.35B	1.18B	1.04B	906.19M	851.86M
Cash, Cash Equivalents and Short-Term Investments	114.28M	148.32M	173.12M	46.03M	48.99M	117.35M
Total Debt	688.69M	676.36M	575.97M	471.85M	376.82M	374.34M
Total Liabilities	937.85M	926.71M	796.56M	671.89M	547.50M	504.00M
Stockholders Equity	444.66M	422.79M	380.88M	365.39M	358.64M	347.07M
Cash Flow
Free Cash Flow	36.11M	77.14M	93.96M	978.00K	31.09M	101.00M
Operating Cash Flow	78.19M	102.21M	106.22M	5.89M	37.09M	107.67M
Investing Cash Flow	-169.60M	-181.69M	-22.65M	-53.42M	-69.02M	-121.80M
Financing Cash Flow	67.87M	56.80M	43.58M	44.31M	-38.49M	77.41M

DXP Enterprises Technical Analysis

Technical Analysis Sentiment

Positive

Last Price90.18

Price Trends

50DMA

84.88

Positive

100DMA

85.52

Positive

200DMA

78.53

Positive

Market Momentum

MACD

1.42

Negative

RSI

64.35

Neutral

STOCH

95.46

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DXPE, the sentiment is Positive. The current price of 90.18 is above the 20-day moving average (MA) of 82.62, above the 50-day MA of 84.88, and above the 200-day MA of 78.53, indicating a bullish trend. The MACD of 1.42 indicates Negative momentum. The RSI at 64.35 is Neutral, neither overbought nor oversold. The STOCH value of 95.46 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DXPE	79 Outperform	$1.42B	18.76	19.45%	―	11.94%	34.08%
AIT	75 Outperform	$9.34B	24.59	22.23%	0.75%	0.50%	4.48%
GIC	75 Outperform	$1.08B	17.68	22.15%	3.70%	-0.79%	-13.64%
MSM	72 Outperform	$5.03B	25.48	14.34%	3.79%	-4.11%	-31.26%
EVI	66 Neutral	$292.05M	46.57	4.71%	―	3.51%	33.35%
DSGR	65 Neutral	$1.33B	1,777.33	0.18%	―	13.91%	―
Sector *	61 Neutral	C$6.52B	9.25	3.44%	2.88%	6.99%	-11.09%

* Industrials Sector Average

Performance Comparison

DXPE

DXP Enterprises

90.18

46.57

106.79%

AIT

Applied Industrial Technologies

245.19

57.07

30.34%

EVI

EVI Industries

22.89

5.59

32.31%

DSGR

Distribution Solutions Group

28.62

0.24

0.85%

MSM

MSC Industrial

89.61

15.49

20.90%

GIC

Global Industrial Company

28.09

-1.03

-3.54%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Jul 03, 2025