Shares of DXP Enterprises, Inc. (DXPE) touched a new 52-week high of $77.00 during its trading session on Sep 23. This denotes an increase over the previous high of $76.91 reached on Mar 25.
DXP Enterprises closed the trading day on Sep 23 at $76.50, reflecting a solid year-to-date return of 54.5%. The trading volume for the session was 0.03 million shares. Further upside potential exists for this Zacks Rank #2 (Buy) industrial equipment wholesaler as can be deduced from its earnings estimate revisions in the last 60 days and expected earnings growth of 14.9% for 2013.
Growth Drivers
DXP Enterprises’ second quarter 2013 financial results were quite impressive as the shares since Aug 1, 2013 have risen almost by 11.1% and upward revision in earnings estimate were also recorded. Earnings per share in the quarter came in at 90 cents, up 12.5% above the year-ago quarter and in-line with the Zacks Consensus Estimate.
Sales grew 17.6% as Service Centers and IPS segments of DXP Enterprises recorded solid revenue growth, offset partially by weak results from the SCS segment. Increase in sales negated the impact of rise in cost of sales that led to gross margin increase of 40 basis points in the quarter. Operating income grew 11.6% year over year and margin stood at 7.6%.
Going forward, management of DXP Enterprises anticipates delivering solid results on the back of organic as well as acquisition contributions. Macro outlook, however, remains grim. Considering the above discussion and a positive 9.9% average earnings surprise of the trailing four quarters, possibility is high for a good quarter in the results which lie ahead.
Estimate Revisions Show Potency
Over the last 60 days, the Zacks Consensus Estimate for DXP Enterprises has increased by 1.3% to $3.85 for 2013 and by 4.5% to $4.60 for 2014, respectively.
DXP Enterprises currently has a market capitalization of $1.1 billion. Other stocks to watch out for in the industry are Gorman-Rupp Co. (GRC) and Graham Corp. (GHM), each holding a Zacks Rank #1 (Strong Buy) while EnPro Industries, Inc. (NPO) has a Zacks Rank #2 (Buy).
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