Markets

DXP Enterprises Expands on Cortech Engineering Buy

Pointing towards a line graph

Industrial equipment wholesaler DXP Enterprises, Inc.DXPE recently completed the acquisition of Yorba Linda, CA-based Cortech Engineering, LLC. Financial terms of the transaction were kept under wraps.

As revealed, Cortech Engineering is a recognized distributor of pumps and related process equipment for customers in Southern and Central, California and Southern Nevada. Prime end-markets served include municipal, water and waste-water, general industrial, chemical and marine. The firm generated revenues of approximately $26.2 million for the 12 months ended Jul 2015.

This acquisition will enable DXP Enterprises to expand its operations in the municipal waste-water treatment, water treatment and desalination markets of the western U.S. The company expects the acquisition to be accretive to its earnings in the years ahead.

We believe the acquisition of Cortech Engineering is consistent with DXP Enterprises' strategic expansion policy, involving both organic and inorganic means. It is also indicative of the company's strong balance sheet and healthy cash position. In second-quarter 2015, the company generated approximately $4.4 million of revenues from its acquired assets.

Despite such expansionary efforts, DXP Enterprises is exposed to certain headwinds that have weakened its investment value in the near term. With a market capitalization of $432 million, the stock presently carries a Zacks Rank #5 (Strong Sell). The low ranking can be justified by 20.5% decline in earnings estimates for 2015 and 21.2% for 2016. Also, the company has an Earnings ESP of -8.10% for 2015 and -11.74% for 2016.

Better-ranked stocks in the machinery industry include Atlas Copco AB ATLKY , Graco Inc. GGG and Luxfer Holdings PLC LXFR . All three stocks hold a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

DXP ENTERPRISES (DXPE): Free Stock Analysis Report

GRACO INC (GGG): Free Stock Analysis Report

ATLAS COP-ADR A (ATLKY): Free Stock Analysis Report

LUXFER HOLDINGS (LXFR): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

ATLKY GGG LXFR DXPE

Other Topics

Stocks

Latest Markets Videos