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
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 9%.
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
Zacks.com. He is also the Editor in charge of the
Run Investor service
DXP ENTERPRISES (
): Free Stock Analysis Report
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