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Here's Why Investing in DXP Enterprises (DXPE) Makes Sense
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DXP Enterprises, Inc. (DXPE - Free Report) has impressed investors with its recent earnings streak, having surpassed estimates thrice in the four trailing quarters. The company’s share price increase reflects its impressive performance, exhibiting investor optimism over the stock. On a year-to-date basis, the company has gained 17.8%, outperforming the industry’s growth of 8.4%.
The stock currently sports a Zacks Rank #1 (Strong Buy) and carries a VGM Score of A. We believe that its notable traction across markets will drive growth in the upcoming quarters.
Factors to Consider
DXP Enterprises is well poised to gain from robust organic growth, acquisitions and disciplined capital deployment. The long-term prospects of the company remain solid, with strength in its capital project and existing growth opportunities in MRO and OEM business.
Going forward, the company’s Innovative Pumping Solutions (IPS) segment is anticipated to benefit from rise in its pump works product and modular packaged equipment for the onshore market. The Service Center segment is likely to continue benefiting from increases in its rotating equipment, safety products and services and metalworking product divisions.
In the third quarter of 2018, the company made significant investments in its IPS segment, including the purchase of patterns for its manufacturing business and various tools and equipment. As a matter of fact, these investments will enhance the efficiency of corporate operations.
The company expects to continue experiencing favorable macroeconomic environment with oil and industrial demand remaining solid. Also, the Application Specialties acquisition has been strengthening the company’s top line since January 2018. Notably, the Application Specialties buyout contributed $12.1 million in revenues in third-quarter 2018. The company perceives that it will continue to be major revenue source in the upcoming quarters as well.
Further, the company’s cash position is impressive, as evident from 15.4% year-over-year increase in cash flow from operating activities in first nine months of 2018. Also, for 2019, it expects to generate strong cash flow.
In addition, analysts have become increasingly bullish on DXP Enterprises. In the past couple of months, the Zacks Consensus Estimate for both 2018 and 2019 earnings has trended up.
Colfax surpassed estimates in each of the trailing four quarters, the average positive earnings surprise being 8.88%.
Tennant Company surpassed estimates thrice in the trailing four quarters, the average positive earnings surprise being 44.10%.
Twin Disc outpaced estimates in each of the preceding four quarters, the average earnings surprise being 220.64%.
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Here's Why Investing in DXP Enterprises (DXPE) Makes Sense
DXP Enterprises, Inc. (DXPE - Free Report) has impressed investors with its recent earnings streak, having surpassed estimates thrice in the four trailing quarters. The company’s share price increase reflects its impressive performance, exhibiting investor optimism over the stock. On a year-to-date basis, the company has gained 17.8%, outperforming the industry’s growth of 8.4%.
The stock currently sports a Zacks Rank #1 (Strong Buy) and carries a VGM Score of A. We believe that its notable traction across markets will drive growth in the upcoming quarters.
Factors to Consider
DXP Enterprises is well poised to gain from robust organic growth, acquisitions and disciplined capital deployment. The long-term prospects of the company remain solid, with strength in its capital project and existing growth opportunities in MRO and OEM business.
Going forward, the company’s Innovative Pumping Solutions (IPS) segment is anticipated to benefit from rise in its pump works product and modular packaged equipment for the onshore market. The Service Center segment is likely to continue benefiting from increases in its rotating equipment, safety products and services and metalworking product divisions.
In the third quarter of 2018, the company made significant investments in its IPS segment, including the purchase of patterns for its manufacturing business and various tools and equipment. As a matter of fact, these investments will enhance the efficiency of corporate operations.
The company expects to continue experiencing favorable macroeconomic environment with oil and industrial demand remaining solid. Also, the Application Specialties acquisition has been strengthening the company’s top line since January 2018. Notably, the Application Specialties buyout contributed $12.1 million in revenues in third-quarter 2018. The company perceives that it will continue to be major revenue source in the upcoming quarters as well.
Further, the company’s cash position is impressive, as evident from 15.4% year-over-year increase in cash flow from operating activities in first nine months of 2018. Also, for 2019, it expects to generate strong cash flow.
In addition, analysts have become increasingly bullish on DXP Enterprises. In the past couple of months, the Zacks Consensus Estimate for both 2018 and 2019 earnings has trended up.
Other Key Picks
Some other top-ranked stocks in the same space are Colfax Corporation , Tennant Company (TNC - Free Report) and Twin Disc, Incorporated (TWIN - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Colfax surpassed estimates in each of the trailing four quarters, the average positive earnings surprise being 8.88%.
Tennant Company surpassed estimates thrice in the trailing four quarters, the average positive earnings surprise being 44.10%.
Twin Disc outpaced estimates in each of the preceding four quarters, the average earnings surprise being 220.64%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>