Here's Why You Should Add DXP Enterprise to Your Portfolio

DXP Enterprises, Inc. DXPE has impressed investors with its recent earnings results, wherein the top line and bottom line surpassed the Zacks Consensus Estimate. We believe that strong traction across the company’s operational segments and accretive acquisitions might continue to be growth drivers, going ahead.

The stock has had an impressive run on the bourse in the past six months. Shares of DXP Enterprises have gained 51.7% against the industry’s decline of 1.8%. We expect that the company’s impressive traction across markets to continue in the quarters ahead.

Given this backdrop, let’s delve deeper to find out the key factors that make this Zacks Rank #1 (Strong Buy) company an attractive proposition for investors right now.

Factors to Consider

DXP Enterprise’s key strengths include its diversified business structure, which enables it to tap opportunities and neutralize operating risks associated with economic down-cycles. Its array of MROP products and service solutions allow it to be flexible and customer-driven, creating competitive advantages for its customers.  The company’s near-term revenues and profitability are poised to get a boost from strong demand across all end markets.

Additionally, the company has been witnessing solid activity on the earnings estimate revision front, reflecting bullish sentiments. In the past couple of months, the Zacks Consensus Estimate for 2018 earnings has trended up from $1.18 to $1.40, on the back of one upward estimate revision versus none downward.

In addition, DXP Enterprises prefers to invest in acquisitions to gain access to new customers, regions and product line. For instance, the company’s recent acquisition of Application Specialties, Inc. is likely to strengthen its metal working business. It will expand the company’s product offerings and help in easy penetration into new markets, especially in the Pacific Northwest market of the United States. Also, the company focuses on disposing non-core assets to enhance its business opportunities from the more profitable ones. In this regard, the divestment of Vertex Corporate Holdings, Inc. is worth mentioning.

Other Stocks to Consider

Some other top-ranked stocks from the same space are Altra Industrial Motion Corp. AIMC, RBC Bearings Incorporated ROLL and Applied Industrial Technologies, Inc. AIT. While Altra Industrial Motion sports a Zacks Rank #1, RBC Bearings and Applied Industrial Technologies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Altra Industrial Motion has surpassed estimates thrice in the trailing four quarters, with an average positive earnings surprise of 4.01%.

RBC Bearings has surpassed estimates twice in the trailing four quarters, with an average positive earnings surprise of 6.48%.

Applied Industrial Technologies has outpaced estimates in each of the preceding four quarters, with an average earnings surprise of 11.78%.

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