Critical Analysis: DXP Enterprises (DXPE) and Fastenal (FAST)
DXP Enterprises (NASDAQ: DXPE) and Fastenal (NASDAQ:FAST) are both industrial products companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, earnings, valuation, risk, dividends, analyst recommendations and institutional ownership.
Insider & Institutional Ownership
73.8% of DXP Enterprises shares are held by institutional investors. Comparatively, 81.7% of Fastenal shares are held by institutional investors. 9.6% of DXP Enterprises shares are held by company insiders. Comparatively, 0.6% of Fastenal shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Fastenal pays an annual dividend of $1.28 per share and has a dividend yield of 3.0%. DXP Enterprises does not pay a dividend. Fastenal pays out 70.3% of its earnings in the form of a dividend. DXP Enterprises has raised its dividend for 6 consecutive years.
This table compares DXP Enterprises and Fastenal’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Valuation & Earnings
This table compares DXP Enterprises and Fastenal’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|DXP Enterprises||$941.54 million||0.49||$59.70 million||$0.84||31.32|
|Fastenal||$4.13 billion||3.00||$952.46 million||$1.82||23.68|
Fastenal has higher revenue and earnings than DXP Enterprises. Fastenal is trading at a lower price-to-earnings ratio than DXP Enterprises, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
DXP Enterprises has a beta of 2.63, suggesting that its share price is 163% more volatile than the S&P 500. Comparatively, Fastenal has a beta of 0.98, suggesting that its share price is 2% less volatile than the S&P 500.
This is a summary of recent recommendations for DXP Enterprises and Fastenal, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
DXP Enterprises presently has a consensus target price of $41.00, suggesting a potential upside of 55.83%. Fastenal has a consensus target price of $50.80, suggesting a potential upside of 17.89%. Given DXP Enterprises’ higher probable upside, equities analysts plainly believe DXP Enterprises is more favorable than Fastenal.
Fastenal beats DXP Enterprises on 12 of the 18 factors compared between the two stocks.
DXP Enterprises Company Profile
DXP Enterprises, Inc. (DXP) is engaged in the business of distributing maintenance, repair and operating (MRO) products, equipment and service to industrial customers. The Company operates through three segments: Service Centers, Supply Chain Services and Innovative Pumping Solutions. The Service Centers segment provides MRO products, equipment and services, including technical expertise and logistics capabilities to industrial customers. The Supply Chain Services segment manages all or part of a customer’s supply chain, including procurement and inventory management. The Innovative Pumping Solutions segment provides source for engineering, systems design and fabrication. It operates from approximately 190 locations in over 40 states in the United States, approximately 10 provinces in Canada, Dubai and one state in Mexico. The Company’s product categories include rotating equipment, bearings & power transmission, industrial supplies, metal working and safety products & services.
Fastenal Company Profile
Fastenal Company is engaged in wholesale distribution of industrial and construction supplies. The Company is engaged in fastener distribution, and non-fastener maintenance and supply business. As of December 31, 2016, it distributed these supplies through a network of approximately 2,500 stores. Its customers are in the manufacturing and non-residential construction markets. The manufacturing market includes both original equipment manufacturers (OEM) and maintenance, repair, and operations (MRO). The non-residential construction market includes general, electrical, plumbing, sheet metal and road contractors. Other users of its products include farmers, truckers, railroads, oil exploration, production and refinement companies, mining companies, federal, state, and local governmental entities, schools and certain retail trades. Its original product offerings are fasteners and other industrial and construction supplies, many of which are sold under the Fastenal product name.
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