Strong Buy on DXP Enterprises - Analyst Blog
22 April 2013 - 3:00PM
Zacks
Zacks Investment Research upgraded
DXP Enterprises, Inc. (DXPE) to a Zacks Rank #1
(Strong Buy) on Apr 20, 2013.
Why the
Upgrade?
Sound track record of posting better than expected quarterly
financial results and benefits from strategic acquisitions have
helped the shares of DXP Enterprises rise by approximately 55%
year-to-date. A brief review of the last reported quarterly results
and the acquisitions made, will to some extent, justify our bullish
stance on the company.
DXP Enterprises reported a year-over-year improvement of 51% in its
earnings per share for the fourth quarter 2012; announced on Feb
27, 2013. The company’s earnings came in at 92 cents per share,
compared with 61 cents reported in the year-ago quarter and 10.8%
above the Zacks Consensus Estimate of 83 cents.
Revenue increased by 34% to settle at $293 million on the back of
solid performances at its segments. Despite a rise in the cost of
sales and operating expenses, operating margin in the quarter was
8.3% above 6.9% in the year-ago quarter.
Over and above the satisfactory the financial results in the year
2012, DXP Enterprises completed seven acquisitions with the help of
nearly $37 million in free cash flow generated during the year. We
see that the company’s policy to expand is at its pace in year 2013
as well. Recently, on Apr 17, 2013, the company completed acquiring
National Process Equipment, Inc. The acquisition has made DXP
Enterprises the largest rotating equipment distributor across North
America.
The earnings estimates are on the rise for this provider of MRO
products, equipment and services. The Zacks Consensus Estimate, in
the last 60 days has gone up by 4.2% both for 2013 and 2014 to
settle at $3.93 and $4.50, respectively. DXP Enterprises is slated
to release its first quarter 2013 financial results on Apr 29,
2013.
All these together with a positive earnings surprise in all the
four trailing quarters with an average of +11.6%, have raised
optimism for better results ahead. For 2013 and 2014, we have an
Earnings ESP (Read: Zacks Earnings ESP: A Better Method) of +24.2%
and +11.6%, respectively.
Other Stocks to Consider
DXP Enterprises caters to the needs of its industrial customers by
providing maintenance, repair and operating (MRO) products,
equipment and services. The company currently has a market
capitalization of roughly $943 million.
Other stocks worth a look in the industry are Tri-Tech
Holding, Inc. (TRIT), EnPro Industries,
Inc. (NPO), and The Babcock & Wilcox
Company (BWC), each holding a Zacks Rank #1 (Strong
Buy).
BABCOCK&WILCOX (BWC): Free Stock Analysis Report
DXP ENTERPRISES (DXPE): Free Stock Analysis Report
ENPRO INDUS INC (NPO): Free Stock Analysis Report
TRI-TECH HOLDNG (TRIT): Free Stock Analysis Report
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