DXP Enterprises, Inc. (DXPE): what the price requires
At today's price, DXP Enterprises, Inc. (DXPE) is priced for +14.8% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/DXPE
Headline
| Field | Value |
|---|---|
| Ticker | DXPE |
| Company | DXP Enterprises, Inc. |
| Current price | $159.95/sh |
| Composition | Service Centers (SC) 68% / Innovative Pumping Solutions (IPS) 19% / Supply Chain Services (SCS) 13% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 2.5% |
| Operating margin today | 8.6% |
| Margin compression implied | -6.1pp |
| Implied growth | 14.8% |
| Multiple paid | 19x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 9.4% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.7pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.13σ |
| cohort percentile (of 225 peers) | 38 |
| sustained it ~5 years at this level | 45% |
| implied end-window share | 0% |
Valuation X-Ray
Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.61x | 5 | expensive |
| Earnings | 5.10x | 5 | expensive |
| Relative | 1.55x | 5 | expensive |
| Growth | 1.02x | 3 | expensive |
Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.2%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $156.76 | 1.02x | yes | FCF base $0.1B, growth 11% (input: historical growth), terminal g 4.0%, WACC 7.2%, 6yr projection |
| DCF Exit Multiple | Growth | $157.43 | 1.02x | yes | Exit EV/EBITDA: 16.2x / 18.2x / 20.2x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $119.83 | 1.33x | yes | P/E 21.52x (blended: static sector reference 18x + trailing (TTM) 30x), scenarios: 17.9x / 21.5x / 25.1x (bear / base = reference held flat / bull), EV/EBITDA 13.86x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $58.16 | 2.75x | yes | BV/sh $31.29, ROE (TTM) 17.2%, ke 9.3% |
| Two-Stage Excess Return | Asset | $78.26 | 2.04x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $116.19 | 1.38x | yes | Rev $2.1B, growth 11% (input: historical growth; tapered), Terminal P/S: 1.1x / 1.3x / 1.5x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $68.84 | 2.32x | yes | EPS $5.34, growth 13% (input: historical EPS growth), PEG=2.31 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $31.35 | 5.10x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.13B × (1−25%) / WACC 7.2% → EPV (no growth) |
| Residual Income | Asset | $78.54 | 2.04x | yes | BV $31.29 + 5yr PV of (ROE (TTM) 17.2% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $61.31 | 2.61x | yes | √(22.5 × EPS $5.34 × BVPS $31.29) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $91.18 | 1.75x | yes | EBITDA $0.18B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $22.12 | 7.23x | yes | FCF $97.2M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $18.03 | 8.87x | yes | SBC-adj FCF $0.09B (FCF $0.10B − SBC $0.01B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $153.42 | 1.04x | yes | EPS $5.34 × (8.5 + 2×12.9%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $11.48 | 13.93x | yes | BV $31.29 × (ROIC 2.7% / WACC 7.2%) |
| P/Sales Sector | Relative | $314.80 | 0.51x | yes | Revenue $2.06B × sector P/S 2.5x |
| PEG Fair Value | Relative | $103.25 | 1.55x | yes | EPS $5.34 × (PEG 1.5 × growth 12.9% (input: historical EPS growth)) → PE 19.3x |
| Earnings Yield | Earnings | $57.73 | 2.77x | yes | EPS $5.34 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $638.9m |
| Net debt / NOPAT (after-tax) | 4.93x |
| Net debt / operating income (pre-tax) | 3.70x |
| Interest coverage | 2.8x |
| Share count CAGR (buyback) | -4.1% |
| Burning cash | no |
Bullet Takeaways
DXP is an industrial-distribution roll-up priced as a durable compounder: at $173.89 only the growth-DCF method reaches the price (asset, earnings-power, and peer-multiple frames sit below), with an implied durability of about twelve and a half years.
The growth is acquisition-driven: Q1 2026 sales rose 9.5% to $521.7 million, but $40.7 million came from three acquisitions bought for about $126.3 million, and net income actually slipped year over year as the share count dilutes near 3.45% a year.
The operating signals are constructive (adjusted EBITDA of $57.8 million, sales per business day up 28% in the quarter, rising bookings, $213.4 million of cash for more deals), but the price leans on continued accretive M&A through cyclical industrial and energy end-markets.
Bull Case
Look at where $173.89 (June 27, 2026) lands against the valuation methods and the pattern is telling: asset, earnings-power, and peer-multiple frames all sit below the price, and only the growth-DCF reaches it. That spread is the signature of a compounder whose value lives in the future rather than in a static snapshot, and DXP has earned that profile by executing a roll-up of the fragmented industrial-distribution market. The company itself describes the dynamic, noting that customers' focus on fewer suppliers has driven consolidation in a fragmented industry [DXPE FY2025 10-K, accession 0001628280-26-012382], and DXP is one of the consolidators.
The operating momentum supports the durability the price assumes. Q1 2026 sales rose 9.5% to $521.7 million, adjusted EBITDA reached $57.8 million, sales per business day grew 28% between January and March, gross margins improved both sequentially and year over year, and management flagged that bookings are trending higher and backlog is healthy to higher. For a distributor, rising bookings and per-day sales are the leading indicators that demand is accelerating, not fading.
The engine underneath is the acquisition machine plus the recurring MRO base. DXP runs three segments led by Service Centers (about 68% of the mix), which sells maintenance, repair, and operating products through customized integrated service [DXPE FY2025 10-K, accession 0001628280-26-012382], a sticky, reorder-driven business. On top of that base, DXP completed three acquisitions in the first quarter, adding $40.7 million of acquisition sales for about $126.3 million invested, with $213.4 million of cash on hand to keep buying. A disciplined consolidator with a sticky distribution base, expanding margins, accelerating bookings, and dry powder for more deals is the kind of durable compounder that the static methods cannot price but the growth methods can, which is exactly why the price sits where it does.
Bear Case
The qualitative truth about DXP is that its growth is bought, not grown, and the price treats acquired growth as if it were organic and permanent. The headline 9.5% sales increase in Q1 2026 included $40.7 million of revenue that came from three acquisitions, purchased for about $126.3 million; strip out the deals and the organic picture is far more modest. A roll-up looks like a fast grower as long as it keeps doing deals, but the moment the acquisition pace slows, or the price paid for targets rises, the growth rate the market is paying for evaporates. The price embeds about twelve and a half years of sustained, elevated economics, an extraordinarily long runway to underwrite for a business whose growth depends on a continuous deal pipeline.
The disconnect between price and fundamentals is stark once you look past the multiple. Net income actually slipped year over year in Q1, to $19.98 million from $20.59 million, even as sales grew, because acquisitions bring integration costs, financing costs, and dilution. The share count has been diluting at roughly 3.45% a year, a meaningful drag that means per-share value grows more slowly than enterprise value, and acquisitions funded partly with stock and debt carry both interest expense and integration risk. The earnings-power frame implies the price is many times the no-growth value of the business, the asset frame says the same, and only the growth-DCF reaches the price by extrapolating the deal-fueled growth far into the future.
The cyclicality is the structural caution. DXP's Service Centers and Innovative Pumping Solutions segments serve industrial, energy, and infrastructure end-markets, and the pump business in particular tracks oil-and-gas and capital-spending cycles. Industrial distribution is a thin-margin, demand-sensitive business; when industrial activity slows, both organic volumes and the appetite for accretive acquisitions contract at the same time, exactly when the roll-up most needs them. The bear case is that a fairly run consolidator is priced for a dozen years of uninterrupted, deal-driven compounding through cyclical end-markets, with dilution quietly eroding the per-share math, and the conservative methods saying the static value is well below the price.
Valuation
DXP is a durability-premium valuation built on a roll-up, and the method spread shows how much of the price depends on the consolidation continuing. The inversion runs on a segment basis and reads the price as elevated, requiring the elevated economics to persist for about twelve and a half years to justify $173.89, with the fade signal tripped.
The method families are sharply tilted. The asset, earnings-power, and peer-multiple frames all sit well below the price (the earnings-power frame in particular implies the price is several multiples of no-growth value), while only the growth-DCF reaches it. That pattern is the moat-or-durability premium signature, here underwritten not by a technology moat but by the company's ability to keep acquiring and integrating distributors accretively in a fragmented market. The blended estimate lands near $101, far below the price, which quantifies how much of the valuation is the growth assumption rather than current economics.
The practical read: this is a well-executed industrial consolidator priced for a long runway of deal-driven compounding. The operating momentum is real (sales up 9.5%, EBITDA of $57.8 million, accelerating bookings, $213.4 million of cash for more deals), and a disciplined roll-up with a sticky MRO base can deserve a premium. But the buyer at $174 is underwriting roughly twelve years of sustained, acquisition-fueled growth through cyclical end-markets, with dilution near 3.45% a year working against the per-share math. The valuation rewards continued accretive M&A and steady industrial demand, and it is exposed if the deal pace slows or the cycle turns.
Catalysts
The most recent catalyst was the Q1 2026 report in early May. Sales rose 9.5% to $521.7 million, GAAP diluted EPS was $1.22, and adjusted EBITDA reached $57.8 million, though net income eased slightly to $19.98 million from $20.59 million a year earlier. Management struck an encouraged tone, noting that bookings are trending higher, backlog is healthy to higher, sales per business day grew 28% between January and March, and gross margins improved sequentially and year over year. The mixed result (strong sales and margins, flat net income) reflects the cost of the acquisition strategy.
The acquisition pipeline is the central forward catalyst. DXP completed three acquisitions in the first quarter, adding $40.7 million of acquisition sales for about $126.3 million invested, and ended the quarter with $213.4 million of cash to fund more deals. For a roll-up, the pace, price, and integration of acquisitions are what drive the growth rate the market is paying for, so each new deal announcement and the accretion it delivers are the key markers. A slowdown in the deal cadence, or richer prices paid, would directly pressure the growth thesis.
The end-market backdrop is the offsetting catalyst. DXP's Service Centers, Innovative Pumping Solutions, and Supply Chain Services segments serve industrial, energy, and infrastructure customers, so the trajectory of industrial activity, capital spending, and oil-and-gas demand governs both organic volumes and the health of acquisition targets. Bookings and backlog trends, organic-versus-acquired growth disclosure, and the cyclicality of the pump business are the items to track quarter to quarter.
Sources: https://www.stocktitan.net/sec-filings/DXPE/8-k-dxp-enterprises-inc-reports-material-event-45c066786f2b.html , https://www.aol.com/finance/dxp-dxpe-q1-2026-earnings-215803736.html , https://simplywall.st/stocks/us/capital-goods/nasdaq-dxpe/dxp-enterprises/news/does-dxpes-mixed-q1-2026-earnings-hint-at-a-shift-in-its-res , https://seekingalpha.com/article/4901849-dxp-enterprises-inc-2026-q1-results-earnings-call-presentation
Peer Cohorts (Per Segment, With Filing Citations)
Service Centers (SC) (reported)
- AIT (APPLIED INDUSTRIAL TECHNOLOGIES, INC.)
- (no filing in the citation store)
- MSM (MSC INDUSTRIAL DIRECT CO., INC.)
- (no filing in the citation store)
- DNOW (DNOW INC.)
- (no filing in the citation store)
- WCC (WESCO International, Inc.)
- (no filing in the citation store)
- GWW (W.W. GRAINGER, INC.)
- (no filing in the citation store)
- FAST (FASTENAL CO)
- (no filing in the citation store)
Innovative Pumping Solutions (IPS) (reported)
- AIT (APPLIED INDUSTRIAL TECHNOLOGIES, INC.)
- (no filing in the citation store)
- DNOW (DNOW INC.)
- (no filing in the citation store)
- FELE (FRANKLIN ELECTRIC CO., INC.)
- (no filing in the citation store)
- GTLS (CHART INDUSTRIES, INC.)
- (no filing in the citation store)
- MWA (MUELLER WATER PRODUCTS, INC.)
- (no filing in the citation store)
Supply Chain Services (SCS) (reported)
- AIT (APPLIED INDUSTRIAL TECHNOLOGIES, INC.)
- (no filing in the citation store)
- MSM (MSC INDUSTRIAL DIRECT CO., INC.)
- (no filing in the citation store)
- GWW (W.W. GRAINGER, INC.)
- (no filing in the citation store)
- FAST (FASTENAL CO)
- (no filing in the citation store)
- WCC (WESCO International, Inc.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.