DXP Enterprises, Inc.

DXP Enterprises, Inc. (DXPE - Snapshot Report) saw sales jump 13.5% from a year ago as demand remained strong for its pumping systems from the oil and natural gas producers. DXPE has surprised on estimates 3 out of the last 4 quarters by an average of 3.99%. The company is cheap with a forward P/E of 6.3.

Company Description

DXP Enterprises distributes Innovative Pumping Solutions (IPS), Supply Chain Services, and MROP (maintenance, repair, operating and production) in pumps, bearings, power transmission, seals, hose, safety, fluid power, and electrical and industrial supplies to a variety of industries such as oil and gas, petrochemical, mining and food and beverage.

DXP provides engineering, fabrication and technical designs for its pumping systems to end-use customers.

Third Quarter Sales Jump 13.5%

On Oct 29, DXP Enterprises reported third-quarter earnings that beat Wall Street estimates by 4.08% or 2 cents per share. Net income rose 57% to $7.03 million, or 51 cents, from $4.48 million, or 33 cents, in the third quarter of 2007.

Sales climbed 75.1% to $186.9 million compared to $106.8 million in the year ago period. However, excluding sales that resulted from acquisitions in 2007 and 2008, sales increased 13.5%.

The company suffered some disruptions in the quarter due to Hurricanes Ike and Gustav but is looking forward to the resumption of normal business activity in the Gulf Coast.

While the company acknowledges the economy uncertainties due to the financial crisis, DXP sees strength in its major markets of food and beverage and energy. It especially sees continuing demand for its Innovative Pumping Solutions which serves the production side of oil and gas.

Consensus Estimates Rise for the Full Year

Given the bullish third-quarter results, 1 out of 3 covering analysts raised full year estimates in the last week. Consensus estimates are up 3 cents to $1.87 in the last 90 days.

Estimates for the fourth quarter are 2 cents higher than 90 days ago at 51 cents.

Value Fundamentals

DXP Enterprises is cheap. It trades at only 6.3x forward earnings. Its price-to-book is 1.54. DXPE has an outstanding 5-year average return on equity (ROE) of 28.94%.