DXP Enterprises (NASDAQ:DXPE) and Ferguson (NYSE:FERG) Critical Analysis

DXP Enterprises (NASDAQ:DXPE) and Ferguson (NYSE:FERG) are both industrials companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, earnings, risk, analyst recommendations, valuation, institutional ownership and profitability.

Risk and Volatility

DXP Enterprises has a beta of 0.97, meaning that its stock price is 3% less volatile than the S&P 500. Comparatively, Ferguson has a beta of 1.13, meaning that its stock price is 13% more volatile than the S&P 500.

Earnings & Valuation

This table compares DXP Enterprises and Ferguson”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DXP Enterprises	$2.02 billion	1.33	$88.68 million	$5.35	32.26
Ferguson	$31.32 billion	1.42	$1.86 billion	$8.60	26.74

Ferguson has higher revenue and earnings than DXP Enterprises. Ferguson is trading at a lower price-to-earnings ratio than DXP Enterprises, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings and target prices for DXP Enterprises and Ferguson, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DXP Enterprises	0	2	2	0	2.50
Ferguson	0	6	11	1	2.72

DXP Enterprises currently has a consensus target price of $154.00, indicating a potential downside of 10.76%. Ferguson has a consensus target price of $277.21, indicating a potential upside of 20.55%. Given Ferguson’s stronger consensus rating and higher probable upside, analysts clearly believe Ferguson is more favorable than DXP Enterprises.

Profitability

This table compares DXP Enterprises and Ferguson’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
DXP Enterprises	4.27%	18.16%	5.70%
Ferguson	6.98%	38.81%	12.83%

Institutional and Insider Ownership

74.8% of DXP Enterprises shares are owned by institutional investors. Comparatively, 82.0% of Ferguson shares are owned by institutional investors. 22.0% of DXP Enterprises shares are owned by company insiders. Comparatively, 0.2% of Ferguson shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Ferguson beats DXP Enterprises on 13 of the 15 factors compared between the two stocks.

About DXP Enterprises

DXP Enterprises, Inc., together with its subsidiaries, engages in distributing maintenance, repair, and operating (MRO) products, equipment, and services in the United States and Canada. It operates through three segments: Service Centers (SC), Supply Chain Services (SCS), and Innovative Pumping Solutions (IPS). The SC segment offers MRO products, equipment, and integrated services, including technical expertise and logistics services. It offers a range of MRO products in the rotating equipment, bearing, power transmission, hose, fluid power, metal working, fastener, industrial supply, safety products, and safety services categories. This segment serves customers in the oil and gas, food and beverage, petrochemical, transportation, other general industrial, mining, construction, chemical, municipal, agriculture, and pulp and paper industries. The SCS segment manages procurement and inventory vinventory optimization and management, storeroom management, transaction consolidation and control, vendor oversight and procurement cost optimization, productivity improvement, and customized reporting services. Its programs include SmartAgreement, a procurement solution for various MRO categories; SmartBuy, an on-site or centralized MRO procurement solution; SmartSource, an on-site procurement and storeroom management solution; SmartStore, an e-Catalog solution; SmartVend, an industrial dispensing solution; and SmartServ, an integrated service pump solution. The IPS segment fabricates and assembles custom-made pump packages; remanufactures pumps; and manufactures branded private label pumps. DXP Enterprises, Inc. was founded in 1908 and is based in Houston, Texas.

About Ferguson

Ferguson Enterprises Inc. distributes plumbing and heating products in North America. The company provides expertise, solutions, and products, including infrastructure, plumbing, appliances, fire, and fabrication, as well as heating, ventilation, and air conditioning (HVAC) to residential and non-residential customers. It also supplies specialist water and wastewater treatment products to residential, commercial, and infrastructure contractors, as well as supplies pipe, valves, and fittings solutions to industrial customers. In addition, it offers customized solutions, such as virtual design, fabrication, valve actuation, pre-assembly, kitting, installation, and project management services, as well as after-sales support that comprises warranty, credit, project-based billing, returns and maintenance, and repair and operations support. The company sells its products through a network of distribution centers, branches, counter service and specialist sales associates, showroom consultants, and e-commerce channels. Ferguson Enterprises Inc. was founded in 1953 and is headquartered in Newport News, Virginia.