DXP Enterprises Inc. Common Stock (DXPE)

FairStock Score: 45/100 — MIXED

Key Financials

Strengths

• Generates $9 million in annual free cash flow (0.3% yield on market cap)
• Solid return on equity of 19.3% above cost of capital

Concerns

• Trades significantly above Graham Number ($62) with negative 173% margin of safety—limited downside protection

AI Analysis

DXP Enterprises Inc. Common Stock is a small-cap industrials company valued at $2.6 billion. The business generates $2.0 billion in annual revenue with a 1.1% net margin and $9 million in free cash flow. From a quality standpoint, DXP shows solid Piotroski F-Score of 6/9 and Altman Z-Score of 2.6 in the grey zone. On valuation, the stock is trading at a premium 31.3x earnings, with trades far above its Graham Number ($62) with no margin of safety. Growth dynamics show revenue growing at 12.0% and profit growth of 6.9%. Our composite FairStock Score of 45/100 reflects mixed fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $9 million in annual free cash flow (0.3% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 31x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer