DXP Enterprises (NASDAQ:DXPE) Posts Earnings Results, Misses Estimates By $0.15 EPS

Key Points

• DXP Enterprises reported record third-quarter revenue of $587.2 million, up 14.3% year over year and slightly above analysts’ $584.5 million estimate.
• EPS was $1.64, missing consensus by $0.15. Gross margin also declined to 30.7% from 31.4%, with management attributing the pressure to product and segment mix.
• All three business segments grew year over year, led by DXP Water’s 71% sales increase; however, quarterly free cash flow fell to $14.4 million from $28.1 million a year earlier.

DXP Enterprises (NASDAQ:DXPE - Get Free Report) released its quarterly earnings results on Thursday. The industrial products company reported $1.64 EPS for the quarter, missing analysts' consensus estimates of $1.79 by ($0.15), Zacks reports. The firm had revenue of $587.18 million for the quarter, compared to analysts' expectations of $584.50 million. DXP Enterprises had a return on equity of 18.67% and a net margin of 4.45%.

Here are the key takeaways from DXP Enterprises' conference call:

• DXP posted record Q3 sales of $587.2 million, up 14.3% year over year, including 8.7% organic growth. Adjusted EBITDA rose 19% to $67.3 million, and diluted EPS increased to $1.64 from $1.31.
• All three segments grew year over year, with Service Center organic sales up 11.3% and DXP Water sales up 71%. IPS sales climbed 43.3%, though acquisitions contributed most of its growth and organic IPS sales increased just 1.6%.
• Gross margin declined to 30.7% from 31.4%, primarily due to an unfavorable mix in Service Centers and IPS. Management described the pressure as mix-related rather than structural, while identifying margin improvement as an opportunity.
• Q3 free cash flow fell to $14.4 million from $28.1 million a year earlier as growth, acquisitions, and project activity required more working capital. Year-to-date free cash flow nevertheless increased to $70.5 million from $19.5 million, and DXP ended the quarter with $218.8 million in cash and no ABL borrowings.

DXP Enterprises Stock Up 5.9%

NASDAQ:DXPE traded up $7.81 during trading hours on Friday, reaching $140.68. The company's stock had a trading volume of 312,433 shares, compared to its average volume of 185,375. The company has a market capitalization of $2.18 billion, a P/E ratio of 23.25 and a beta of 1.03. DXP Enterprises has a 12 month low of $84.04 and a 12 month high of $208.00. The company has a debt-to-equity ratio of 1.43, a quick ratio of 2.58 and a current ratio of 2.96. The stock has a 50 day moving average price of $178.94 and a two-hundred day moving average price of $161.97.

Analyst Ratings Changes

DXPE has been the subject of a number of research analyst reports. Wall Street Zen lowered shares of DXP Enterprises from a "strong-buy" rating to a "buy" rating in a report on Saturday, October 31st. Weiss Ratings cut shares of DXP Enterprises from a "buy (b)" rating to a "buy (b-)" rating in a research report on Monday, October 26th. Finally, Stephens upped their target price on shares of DXP Enterprises from $160.00 to $220.00 and gave the stock an "overweight" rating in a research note on Friday, August 7th. Two analysts have rated the stock with a Buy rating and two have assigned a Hold rating to the company. According to MarketBeat, the company presently has a consensus rating of "Moderate Buy" and a consensus target price of $187.00.

Trending Headlines about DXP Enterprises

Here are the key news stories impacting DXP Enterprises this week:

• Positive Sentiment: Revenue was $587.2 million, modestly above analysts’ $584.5 million estimate, and coverage highlighted double-digit sales growth. Revenue results
• Neutral Sentiment: Some coverage raised the possibility that DXPE may be undervalued, but that view is tempered by earnings and fourth-quarter outlook concerns. Valuation and outlook article
• Negative Sentiment: Adjusted earnings were $1.64 per share, missing the $1.79 consensus estimate. Reports pointed to margin pressure, meaning sales growth did not translate into earnings as strongly as investors expected. Q3 margin analysis
• Negative Sentiment: The earnings miss has also raised questions about the fourth-quarter outlook, contributing to pressure on the shares after results. Stock reaction coverage

DXP Enterprises Company Profile

DXP Enterprises, Inc is an industrial distribution and services company headquartered in Houston, Texas. The company supplies maintenance, repair and operating products used by industrial, commercial and government customers, with an emphasis on rotating equipment, fluid handling and related industrial applications.

Its product offerings include pumps, valves, bearings, power-transmission components, hose and rubber products, industrial supplies, safety equipment and other maintenance products.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.