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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' Q3 2025 Earnings: A Strong Performance

DXP Enterprises reported a robust third quarter, with total sales reaching a record $513.7 million, an 8.6% year-over-year increase. Adjusted EBITDA was $65.5 million, with a margin of 11%. The company's earnings per diluted share was $1.34, slightly below the estimated $1.45. Gross margins improved to 31.39%, a 50 basis point increase from Q3 2024. Operating income was $43.7 million, with an operating income margin of 8.5%. The increase in SG&A expenses by $11 million from Q3 2024 was largely due to business growth and associated incentive compensation.

Publication Date: Nov -12

📋 Highlights
  • Total Sales Growth:: Q3 sales rose 8.6% YoY to $513.7M, a record for the company.
  • Adjusted EBITDA Performance:: EBITDA reached $65.5M with a 11% margin, reflecting 1.5x operating leverage.
  • Segment Strength:: IPS sales surged 11.9% YoY, while Service Centers grew 10.5% with a 117 bps margin improvement.
  • Free Cash Flow & ROIC:: Free cash flow hit $28.2M (up from $24.4M YoY), and ROIC reached 33%, exceeding cost of capital.
  • Debt & Liquidity:: Total debt was $644M, but liquidity stood at $277.3M, including $123.8M in cash, with a secured leverage ratio of 2.3:1.

Segment Performance

Innovative Pumping Solutions (IPS) sales grew 11.9% year-over-year, driven by strong backlogs in energy and water and wastewater businesses. Service Center sales also increased by 10.5% year-over-year, with a notable 117 basis point improvement in gross profit margins. However, Supply Chain Services sales declined 5% year-over-year, a trend worth monitoring. The overall growth across segments contributed to the company's top-line performance.

Cash Flow and Balance Sheet

DXP's working capital increased to $364.5 million, and the company maintained $277.3 million in liquidity, including $123.8 million in cash. Free cash flow improved to $28.2 million in Q3, reflecting enhancements in profitability. The company's return on invested capital (ROIC) was 33%, indicating the success of recent acquisitions. As of September 30, DXP had $644 million in total debt, with a fixed charge coverage ratio of 2.2:1 and a secured leverage ratio of 2.3:1.

Outlook and Valuation

Management expects EBITDA margins to remain around 11% in Q4, with a slightly lighter quarter due to holidays. The acquisition pipeline remains robust, with plans to close at least three more acquisitions by the end of Q1 2026. Analysts estimate next year's revenue growth at 6.7%. With a P/E Ratio of 17.65 and an EV/EBITDA of 8.17, the market seems to have priced in a certain level of growth. The ROIC of 33% is significantly higher than the cost of capital, indicating effective capital allocation.

Growth Opportunities

DXP is exploring opportunities in the data center market, although it's not a significant market for the company yet. The company's ability to tap into new markets, along with its strong acquisition pipeline, positions it for potential future growth. As the company continues to execute its strategy, investors will be watching for progress in these areas.

3. NewsRoom

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DXP Enterprises, Inc. Announces Acquisition of Pump Solutions, Inc.

Dec -03

Source: businesswire.com

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DXP Enterprises, Inc. $DXPE Shares Sold by Boston Partners

Nov -29

Source: defenseworld.net

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DXP Enterprises, Inc. (DXPE) Q3 2025 Earnings Call Transcript

Nov -07

Source: seekingalpha.com

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DXP Enterprises, Inc. Reports Third Quarter 2025 Results

Nov -06

Source: businesswire.com

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DXP Enterprises Q3 2025 Preview: After Nailing Q2, Here's What I Expect This Time

Nov -06

Source: seekingalpha.com

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Top 10 Quant Stocks Of 2025 Up 45%

Nov -05

Source: seekingalpha.com

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DXP Enterprises, Inc. Announces Acquisition of Triangle Pump & Equipment, Inc.

Nov -03

Source: businesswire.com

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DXP Enterprises, Inc. Announces Third Quarter 2025 Earnings Release and Conference Call

Nov -03

Source: businesswire.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: 5.5/10

Value: 4.0

Growth: 4.9

Quality: 6.9

Yield: 7.0

Momentum: 6.0

Volatility: 4.3

1-Year Total Return ->

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Stock-Card
DXP Enterprises

A-Score: 4.9/10

Value: 3.7

Growth: 7.1

Quality: 4.5

Yield: 0.0

Momentum: 10.0

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
EVI Industries

A-Score: 4.4/10

Value: 4.7

Growth: 7.0

Quality: 6.8

Yield: 1.0

Momentum: 4.5

Volatility: 2.3

1-Year Total Return ->

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Compass Diversified

A-Score: 4.4/10

Value: 7.4

Growth: 2.3

Quality: 4.5

Yield: 10.0

Momentum: 0.0

Volatility: 2.0

1-Year Total Return ->

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Stock-Card
Titan Machinery

A-Score: 4.4/10

Value: 7.8

Growth: 4.4

Quality: 2.8

Yield: 0.0

Momentum: 6.5

Volatility: 4.7

1-Year Total Return ->

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Stock-Card
Transcat

A-Score: 3.1/10

Value: 2.7

Growth: 6.2

Quality: 5.3

Yield: 0.0

Momentum: 0.0

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

95.74$

Current Price

95.74$

Potential

-0.00%

Expected Cash-Flows