Industrial equipment wholesaler, DXP Enterprises, Inc. (DXPE), recently announced its board of directors approval for a new share buyback program, involving roughly 0.4 million common shares. The news, contributing majorly toward the 5.7% share price gain recorded on Dec 17, seems to have lifted investors’ sentiments.
As disclosed, DXP Enterprises can repurchase the shares from the open market under favorable conditions, or resort to private negotiated transactions. Through this, the company aims to nullify the dilutive impact from shares issued under the company’s Restricted Stock Plan. The program is valid till Dec 2016.
DXP Enterprises believes in rewarding its shareholders handsomely through dividend payments and share buyback programs. Recently, the company completed its repurchase program of 0.2 million shares that was authorized in May 2014. Also, in the nine months ended Sep 30, the company disbursed dividends totaling $0.07 million.
Such capital deployment policy of DXP Enterprises is reflective of its strong liquidity position. In the nine months ended Sep 30, the company generated roughly $62.9 million of cash from its operating activities, and had a cash balance of $10 million at the end of third-quarter 2014.
The Zacks Consensus Estimate for DXP Enterprises is currently pegged at $3.99 for 2014 and $4.58 for 2015, reflecting year-over-year growth of 1.1% and 14.8%, respectively.
With a market capitalization of $684 million, DXP Enterprises presently carries a Zacks Rank #2 (Buy). Some better-ranked stocks in the machinery industry include Blount International Inc. (BLT), Middleby Corp. (MIDD) and Sun Hydraulics Corp. (SNHY). While both Blount International and Middleby Corp. sport a Zacks Rank #1 (Strong Buy), Sun Hydraulics holds a Zacks Rank #2 (Buy).
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