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1. Company Snapshot

1.a. Company Description

DXP Enterprises, Inc., together with its subsidiaries, engages in distributing maintenance, repair, and operating (MRO) products, equipment, and services to the energy and industrial customers primarily in the United States and Canada.It operates through three segments: Service Centers (SC), Supply Chain Services (SCS), and Innovative Pumping Solutions (IPS).The SC segment offers MRO products, equipment, and integrated services, including technical expertise and logistics services.


It offers a range of MRO products in the rotating equipment, bearing, power transmission, hose, fluid power, metal working, fastener, industrial supply, safety products, and safety services categories.This segment serves customers in the oil and gas, food and beverage, petrochemical, transportation, other general industrial, mining, construction, chemical, municipal, agriculture, and pulp and paper industries.The SCS segment manages procurement and inventory management solutions; and offers outsourced MRO solutions for sourcing MRO products, including inventory optimization and management, store room management, transaction consolidation and control, vendor oversight and procurement cost optimization, productivity improvement, and customized reporting services.


Its programs include SmartAgreement, a procurement solution for various MRO categories; SmartBuy, an on-site or centralized MRO procurement solution; SmartSource, an on-site procurement and storeroom management solution; SmartStore, an e-Catalog solution; SmartVend, an industrial dispensing solution; and SmartServ, an integrated service pump solution.The IPS segment fabricates and assembles custom-made pump packages, remanufactures pumps, and manufactures branded private label pumps.The company was founded in 1908 and is based in Houston, Texas.

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1.b. Last Insights on DXPE

DXP Enterprises' recent stock performance was negatively driven by weak earnings and revenue growth, partly offset by its share buyback program. Despite a strong start to 2025, the company's stock has struggled to maintain momentum. A -1.8% move on February 24th was a significant dip, and the company's inability to keep pace with the broader market has weighed on investor sentiment. The recent trading sessions have seen mixed results, with some days showing slight increases and others significant dips. The company's inability to sustain growth has raised concerns among investors.

1.c. Company Highlights

2. DXP Enterprises' Strong 2025 Performance Driven by Diversification and Operational Excellence

DXP Enterprises reported a robust financial performance for fiscal 2025, with sales growing 11.9% to $2 billion, gross profit margins expanding 67 basis points to 31.5%, and adjusted EBITDA reaching $225.3 million with an 11.2% margin. Earnings per share (EPS) came in at $1.39, beating analyst estimates of $1.3. The company's diversification across various end markets, including energy, water and wastewater, and general industry, has reduced cyclicality and driven consistent performance.

Publication Date: Mar -05

📋 Highlights
  • Record Sales Growth: Fiscal 2025 sales surged 11.9% to $2 billion, including $527.4 million in Q4.
  • Gross Margin Expansion: Gross profit margins improved 67 bps to 31.5%, driven by all segments.
  • IPS Segment Outperformance: Innovative Pumping Solutions grew 26.4% to $390.3 million, led by energy and water projects.
  • Adjusted EBITDA Record: Adjusted EBITDA reached $225.3 million (11.2% margin), up from prior year.
  • Strong Free Cash Flow: Generated $54 million in free cash flow, with $94.3 million from operating activities.

Segment Performance

The Innovative Pumping Solutions segment led the way, growing 26.4% year-over-year to $390.3 million, driven by strength in energy and water-related project activity. Service Centers delivered 11% total sales growth, including 9.8% organic growth, driven by the diversity of end markets and the multiple product MRO-focused operating model. Supply Chain Services experienced a modest decline year-over-year, primarily due to customer facility closures and reduced activity at certain energy-related sites.

Margin Expansion and Cash Flow Generation

DXP's overall gross profit margins for the year were 31.5%, a 67 basis point improvement over 2024. The company generated $94.3 million in cash from operating activities, translating into $54 million of free cash flow during fiscal 2025. As Kent Yee noted, "We generated solid operating cash flow in Q4 and fiscal 2025, with cash flow from operations of $42.6 million and $94.3 million, respectively."

Valuation and Outlook

With a P/E Ratio of 25.16 and an EV/EBITDA multiple of 13.37, the market appears to be pricing in a certain level of growth and profitability. Analysts estimate next year's revenue growth at 10.3%, which suggests that the company is on track to continue its strong performance. With a Return on Invested Capital (ROIC) of 39.2%, measurably above its cost of capital, DXP Enterprises is well-positioned to drive growth and improve profitability. The company's strong financial position, with $303.8 million in cash and $153.5 million in ABL availability, provides flexibility to pursue strategic acquisitions and return capital to shareholders.

Debt Profile and Capital Allocation

DXP Enterprises has a manageable debt profile, with a fixed charge coverage ratio of 2.1:1 and a secured leverage ratio of 2.3:1. The company successfully repriced its Term Loan B, reducing its borrowing cost by 50 basis points to SOFR plus 325, and raised an incremental $205 million in capital to support its acquisition and investments program. The company repurchased $17 million worth of shares via its share repurchase program in fiscal 2025 and is expected to continue to focus on driving growth and improving profitability.

3. NewsRoom

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DXP Enterprises (DXPE) Stock Drops Despite Market Gains: Important Facts to Note

Apr -15

Source: zacks.com

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Buy These 5 Manufacturing Stocks to Tap Recent Industry Rally

Apr -13

Source: zacks.com

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DXP Enterprises (DXPE) Rises Higher Than Market: Key Facts

Apr -09

Source: zacks.com

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SG Americas Securities LLC Buys 13,115 Shares of DXP Enterprises, Inc. $DXPE

Apr -07

Source: defenseworld.net

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Are Industrial Products Stocks Lagging DXP Enterprises (DXPE) This Year?

Mar -30

Source: zacks.com

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Solid Cash-Flow Growth Makes These 4 Stocks Worth Buying Now

Mar -27

Source: zacks.com

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Best Momentum Stocks to Buy for March 26th

Mar -26

Source:

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New Strong Buy Stocks for March 26th

Mar -26

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.71%)

6. Segments

Service Centers

Expected Growth: 2.5%

DXP Enterprises' Service Centers segment growth of 2.5% is driven by increasing demand for MRO (Maintenance, Repair, and Operations) services, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on digital transformation, cost savings initiatives, and investments in employee development have contributed to the segment's growth.

Innovative Pumping Solutions

Expected Growth: 3.5%

DXP Enterprises' Innovative Pumping Solutions segment growth of 3.5% is driven by increasing demand for energy-efficient solutions, expansion in oil and gas markets, and strategic acquisitions. Additionally, investments in digitalization and IoT technologies enhance product offerings, while a strong distribution network and customer relationships support revenue growth.

Supply Chain Services

Expected Growth: 2.8%

DXP Enterprises' Supply Chain Services segment growth of 2.8% is driven by increasing demand for MRO (Maintenance, Repair, and Operations) products, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on digital transformation, process optimization, and cost savings initiatives contribute to its growth. Strong relationships with customers and suppliers also support the segment's growth.

7. Detailed Products

MRO Products

DXP Enterprises, Inc. offers a wide range of maintenance, repair, and operations (MRO) products, including bearings, power transmission, and electrical and automation products.

Rotating Equipment

DXP Enterprises, Inc. provides rotating equipment solutions, including pumps, mixers, and gearboxes, for various industries such as oil and gas, chemical processing, and power generation.

Bearing and Power Transmission Solutions

DXP Enterprises, Inc. offers a range of bearing and power transmission solutions, including bearings, belts, and chains, for various industries such as manufacturing, oil and gas, and construction.

Electrical and Automation Solutions

DXP Enterprises, Inc. provides electrical and automation solutions, including electrical distribution, control systems, and automation products, for various industries such as manufacturing, oil and gas, and power generation.

Safety and Jan-San Products

DXP Enterprises, Inc. offers a range of safety and janitorial-sanitation (Jan-San) products, including personal protective equipment, cleaning supplies, and facility maintenance products.

Innovation and Technical Services

DXP Enterprises, Inc. provides innovative solutions and technical services, including engineering, design, and fabrication, for various industries such as oil and gas, chemical processing, and power generation.

8. DXP Enterprises, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for DXP Enterprises, Inc. is moderate due to the availability of alternative products and services in the market.

Bargaining Power Of Customers

The bargaining power of customers is high due to the presence of large and established customers who can negotiate better prices and terms.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the company's ability to negotiate better prices and terms with its suppliers.

Threat Of New Entrants

The threat of new entrants is moderate due to the presence of barriers to entry, such as high capital requirements and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of several established competitors in the market, leading to a highly competitive environment.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 58.86%
Debt Cost 11.42%
Equity Weight 41.14%
Equity Cost 12.57%
WACC 11.89%
Leverage 143.08%

11. Quality Control: DXP Enterprises, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Global Industrial

A-Score: 5.8/10

Value: 5.0

Growth: 4.9

Quality: 6.9

Yield: 7.0

Momentum: 6.0

Volatility: 5.0

1-Year Total Return ->

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Stock-Card
DXP Enterprises

A-Score: 4.9/10

Value: 4.4

Growth: 7.1

Quality: 6.1

Yield: 0.0

Momentum: 8.0

Volatility: 3.7

1-Year Total Return ->

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Compass Diversified

A-Score: 4.6/10

Value: 9.5

Growth: 2.2

Quality: 4.0

Yield: 10.0

Momentum: 0.0

Volatility: 2.0

1-Year Total Return ->

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Titan Machinery

A-Score: 4.1/10

Value: 8.0

Growth: 4.4

Quality: 2.0

Yield: 0.0

Momentum: 6.0

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
EVI Industries

A-Score: 3.7/10

Value: 3.0

Growth: 7.0

Quality: 3.8

Yield: 2.0

Momentum: 3.5

Volatility: 2.7

1-Year Total Return ->

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Stock-Card
Transcat

A-Score: 3.1/10

Value: 3.2

Growth: 6.2

Quality: 4.1

Yield: 0.0

Momentum: 0.5

Volatility: 4.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

151.15$

Current Price

151.15$

Potential

-0.00%

Expected Cash-Flows