DXP Enterprises, Inc.
consistently beats the Zacks Consensus Earnings Estimate and
is seeing estimates increase for the current quarter.
Houston, TX-based DXP Enterprises is a distributor of
pumps, bearings, and general MRO supplies. The firm
also offers higher value-added services, such as
integrated supply and fabrication/assembly of pump,
hydraulic, and gear systems and components. Its
customer base is primarily North American through ~165
sites. Markets served include global energy, domestic
food/beverage, and domestic general industrial.
Estimates Move Higher
DXPE has seen its Zacks Consensus Earnings Estimate for the
coming quarter increase 6% since late November. The increase
is an indication that analysts believe that the company will
continue to produce higher earnings.
Acquisitions drive growth
DXPE has moved to acquire two companies over the last few
months. These acquisitions do not appear, at least to one
covering analyst, to be about cost synergies, but rather to
add critical mass. The Kenneth Crosby transaction was
immediately accretive to earnings and was announced on
10/12/11 and discussed on the most recent earnings conference call.
The company also acquired C.W. Rod Tool Company which is
headquartered much closer to company headquarters in
Houston, Texas. The C.W. Rod Tool Company deal was announced
in mid-December 2011.
Solid History of Earnings Surprises
DXPE has posted positive earnings surprises in each of the
last six quarters. The average earnings beat is just a bit
over $0.03. As earnings continue to grow, the beats of $0.03
and $0.04 have become smaller in terms of percentage of
total earnings, but that has not slowed down the price impact
on shares. In the most recent quarter, the beat of $0.03
was roughly 5%, but the price impact on shares was a healthy
On a price to earnings basis, DXPE trades at a slight
premium to the industry on a trailing twelve month basis.
On the forward PE, the premium is more pronounced,
indicating the higher expectations for DXPE compared to the
industry. On the value side of things, shares trade at a
slight premium in terms of price to book, but at a slight
discount for price to sales when both metrics are compared
to the industry.
The price and consensus chart below shows that increased
earnings expectations have help push the stock higher.
Having seen quite a run of late, shares of DXPE still have
room to run should earnings continue to beat expectations.
Shrewd M&A activity to help drive earnings will certainly
help the business and the stock to move higher. DXPE is a
Zacks #1 Rank (Strong Buy).
Brian Bolan is the Aggressive Growth Stock Strategist for
is also the Editor in charge of the Zacks
Run Investor service