Core Viewpoint - DXP Enterprises, Inc. has completed the acquisitions of PREMIERflow, LLC and Mid Atlantic Storage Systems Inc., enhancing its project capabilities and market presence in various sectors [1][4]. Company Acquisitions - DXP funded the acquisitions using cash from its balance sheet, with financial terms not disclosed [1]. - The signing of definitive agreements occurred on January 1, 2026, with PREMIERflow and Mid Atlantic contributing approximately $93.7 million in sales and $20.9 million in adjusted EBITDA for the eleven months ending November 30, 2025 [5]. Strategic Importance - The acquisitions align with DXP's growth strategy, aiming to expand into varied end markets and maintain its position as the largest distributor of rotating equipment in North America [4]. - Both companies provide exceptional project capabilities that will enhance DXP's ability to serve customers and grow existing platforms [2][4]. Market Focus - PREMIERflow specializes in integrated fluid handling pump systems for fire protection, water & wastewater supply, data centers, and HVAC process industries [2]. - Mid Atlantic Storage Systems offers liquid storage tank products and services, focusing on water & wastewater, leachate, data center, and fire suppression markets [3]. Leadership Insights - DXP's CEO, David Little, expressed enthusiasm about the acquisitions, highlighting their potential to enhance DXP's offerings and market share [4][6]. - The President of PREMIERflow noted that joining DXP will allow for better customer service and competitive positioning in the market [6]. - The President of Mid Atlantic Storage Systems emphasized the complementary nature of their expertise with DXP's approach to building the DXP Water platform [7]. Employee and Market Impact - The acquisitions will add over 185 employees to DXP, diversifying its products, services, and end market exposure [8]. - DXP anticipates that these acquisitions will be accretive to earnings and provide momentum going into 2026 [8].

Core Insights - DXP Enterprises successfully completed a refinancing of $848 million, which includes $643 million in existing Term Loan B borrowings and an additional $205 million, aimed at enhancing liquidity and flexibility for growth [1] - The refinancing is expected to generate approximately $3.2 million in annual interest savings, allowing for strategic reinvestment and potential acquisitions [1] - DXP's sales have increased from $1.0 billion in 2020 to $1.96 billion for the twelve months ending September 30, 2025, with adjusted EBITDA rising from $64.9 million to over $225 million during the same period [1] - The company's pro forma net debt to EBITDA ratio stands at 2.8:1 following the refinancing [1] Company Overview - DXP Enterprises, Inc. is a leading distributor of products and services, providing value-added solutions to industrial customers across the United States, Canada, Mexico, and Dubai [1] - The company specializes in innovative pumping solutions, supply chain services, and maintenance, repair, operating, and production (MROP) services, leveraging extensive product knowledge and technical expertise [1] - DXP's business segments include Service Centers, Innovative Pumping Solutions, and Supply Chain Services, which create competitive advantages for customers [1]

Group 1 - DXP Enterprises (DXPE) has experienced a 23% increase in stock price over the last month following a 30% decline in November after the release of its Q3 earnings [1] - The company reported a significant miss on adjusted EPS and recorded its first year-over-year earnings decline [1]

Investors seek growth stocks to capitalize on above-average growth in financials that help these securities grab the market's attention and produce exceptional returns. However, it isn't easy to find a great growth stock.By their very nature, these stocks carry above-average risk and volatility. Moreover, if a company's growth story is over or nearing its end, betting on it could lead to significant loss.However, it's pretty easy to find cutting-edge growth stocks with the help of the Zacks Growth Style Sco ...

Core Insights - The article emphasizes the importance of strong foundational companies in the technology, industrial, and conglomerate sectors for long-term success [1] Group 1: Company Analysis - Companies with robust financials and strategic narratives are highlighted as having the potential for sustained performance [1] - The analysis combines financial metrics with storytelling to provide insights into market dynamics and company prospects [1]

Core Insights - The article emphasizes the importance of strong foundational companies in the technology, industrial, and conglomerate sectors for long-term success [1] Group 1: Company Analysis - The focus is on analyzing diverse businesses, particularly those with robust financials and strategic positioning [1] - The analysis combines financial metrics with narrative storytelling to provide insights into market performance [1] Group 2: Industry Perspective - There is a clear dedication to understanding and explaining the financial world, highlighting the significance of both quantitative and qualitative analysis in investment research [1]

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on DXP Enterprises (DXPE), and emphasizes the importance of using these recommendations in conjunction with other research tools like the Zacks Rank to make informed investment decisions [1][5][11]. Brokerage Recommendations - DXP Enterprises has an average brokerage recommendation (ABR) of 1.83, indicating a consensus between Strong Buy and Buy, with one Strong Buy and one Buy recommendation from three brokerage firms [2][5]. - The distribution of recommendations shows that Strong Buy and Buy each account for 33.3% of the total recommendations [2]. Limitations of Brokerage Recommendations - Studies indicate that brokerage recommendations have limited success in guiding investors towards stocks with the best price increase potential, often reflecting a strong positive bias due to the vested interests of brokerage firms [5][6][11]. - Analysts tend to issue more favorable ratings than their research would support, which can mislead investors [11]. Zacks Rank as an Alternative - The Zacks Rank is presented as a more reliable indicator of a stock's near-term price performance, based on earnings estimate revisions, and is classified into five groups from Strong Buy to Strong Sell [8][12]. - The Zacks Rank is updated more frequently than the ABR, making it a timely tool for predicting future stock prices [13]. Current Earnings Estimates for DXP Enterprises - The Zacks Consensus Estimate for DXP Enterprises remains unchanged at $4.75 for the current year, suggesting steady analyst views on the company's earnings prospects [14]. - The unchanged consensus estimate has resulted in a Zacks Rank of 3 (Hold) for DXP Enterprises, indicating a cautious approach despite the Buy-equivalent ABR [15].

Core Thesis - DXP Enterprises, Inc. presents a compelling bullish case due to its strong execution across diversified segments, record backlogs, and disciplined capital allocation [2][5] Financial Performance - As of December 2nd, DXP's share was trading at $96.50, with a trailing P/E of 17.64 [1] - Consensus estimates project Q3 revenue of $499 million and EPS of $1.57, with a stronger base case of $502–$512 million in revenue and $1.55–$1.65 in EPS [2] - In Q2, DXP reported an EPS of $1.43, beating estimates, with revenue of $498.7 million [3] Segment Performance - Innovative Pumping Solutions (IPS) grew 27.5% year-over-year with 19.9% margins, while Service Centers rose 10.8% at 14.8% margins [3] - The Water segment has shown resilience, marking its 11th consecutive quarterly increase [4] Strategic Initiatives - Management expresses confidence in sustained project flow, particularly from IPS bookings, which provide visibility for the next 9–12 months [4] - Recent acquisitions, including McBride and Moores Pump, are expected to enhance scale and quality [4] Market Conditions - The macroeconomic backdrop is favorable for DXP's hybrid MRO-plus-project model, with manufacturing below 50 and services above 50 [5] - Key watchpoints include backlog trends, SCS profitability improvements, and ongoing M&A activity [5]

Core Viewpoint - The average brokerage recommendation (ABR) for DXP Enterprises (DXPE) is 1.83, indicating a general suggestion to buy the stock, but reliance solely on this metric may not be advisable due to the potential bias in brokerage recommendations [2][5][10]. Brokerage Recommendations - DXP Enterprises has an ABR of 1.83, which is close to a "Strong Buy" rating, based on recommendations from three brokerage firms [2]. - Among the three recommendations, one is classified as "Strong Buy" and one as "Buy," each representing 33.3% of the total recommendations [2]. Limitations of Brokerage Recommendations - Studies indicate that brokerage recommendations often lack success in guiding investors towards stocks with significant price appreciation potential [5]. - Analysts from brokerage firms tend to exhibit a strong positive bias in their ratings, issuing five "Strong Buy" recommendations for every "Strong Sell" [6][10]. - The interests of brokerage firms may not align with those of retail investors, leading to a lack of reliable insight into future stock price movements [7]. Zacks Rank as an Alternative - The Zacks Rank, a proprietary stock rating tool, categorizes stocks from Zacks Rank 1 (Strong Buy) to Zacks Rank 5 (Strong Sell) and is considered an effective indicator of near-term stock price performance [8][11]. - The Zacks Rank is based on earnings estimate revisions, which are strongly correlated with stock price movements, unlike the ABR which is based solely on brokerage recommendations [11][12]. Current Earnings Estimates for DXP Enterprises - The Zacks Consensus Estimate for DXP Enterprises remains unchanged at $4.75 for the current year, suggesting stable analyst views on the company's earnings prospects [13]. - The unchanged consensus estimate has resulted in a Zacks Rank of 3 (Hold) for DXP Enterprises, indicating a cautious approach despite the Buy-equivalent ABR [14].

Core Insights - DXP Enterprises reported Q3 CY2025 revenue of $513.7 million, exceeding analyst expectations by 3% with an 8.6% year-on-year growth [1][6] - Non-GAAP profit per share was $1.34, which was 14.4% below analysts' consensus estimates of $1.57 [1][6] - The market reacted negatively to the profit shortfall despite strong sales growth [3] Revenue and Profit Performance - Revenue of $513.7 million compared to analyst estimates of $498.8 million, marking an 8.6% year-on-year growth [6] - Adjusted EPS of $1.34 fell short of expectations of $1.57, representing a 14.4% miss [6] - Adjusted EBITDA was $56.5 million, beating estimates of $54.7 million, with an 11% margin [6] Segment Performance - Service Centers segment showed consistent year-over-year growth, driven by demand in air compressors, metalworking, and safety services [7] - Innovative Pumping Solutions saw increased sales, with the DXP Water platform now representing a majority of segment sales, improving overall margins [7] - Supply Chain Services faced a decline due to reduced spending in oil and gas and chemical sectors, with expectations for recovery in early 2026 [7] Management Outlook - Management anticipates continued top-line momentum supported by a healthy acquisition pipeline and expansion in water and wastewater projects [4] - CFO indicated that 11% EBITDA margins are sustainable for now, but cautioned about seasonal softness and elevated SG&A expenses in the upcoming quarter [4] - The company is focusing on balancing growth investments with operational efficiency as it enters the next year [4] Cost and Expense Analysis - Rising operating expenses were attributed to merit raises, increased insurance premiums, technology investments, and professional fees from acquisition activities [8] - Some elevated costs, such as insurance and claims, are expected to persist but are deemed necessary for long-term growth [8]