DXP currently trades at $199.98 and has been a dream stock for shareholders. It’s returned 568% since August 2021, blowing past the S&P 500’s 76.8% gain. The company has also beaten the index over the past six months as its stock price is up 35.6% thanks to its solid quarterly results.
Is now still a good time to buy DXPE? Or are investors being too optimistic? Find out in our full research report, it’s free.
Why Is DXP a Good Business?
Founded during the emergence of Big Oil in Texas, DXP (NASDAQ:DXPE) provides pumps, valves, and other industrial components.
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, DXP’s 16.8% annualized revenue growth over the last five years was incredible. Its growth beat the average industrials company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
DXP’s EPS grew at 49.5% compounded annual growth rate over the last five years, higher than its 16.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Increasing Free Cash Flow Margin Juices Financials
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
As you can see below, DXP’s margin expanded by 4 percentage points over the last five years. We have no doubt shareholders would like to continue seeing its cash conversion rise as it gives the company more optionality. DXP’s free cash flow margin for the trailing 12 months was 5.5%.
Final Judgment
These are just a few reasons why we think DXP is an elite industrials company, and with its shares beating the market recently, the stock trades at 27.9× forward P/E (or $199.98 per share). Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
Stocks We Like Even More Than DXP
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