Critical Review: Distribution Solutions Group (NASDAQ:DSGR) and DXP Enterprises (NASDAQ:DXPE)

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

Analyst Ratings

This is a breakdown of recent recommendations and price targets for DXP Enterprises and Distribution Solutions Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DXP Enterprises	0	2	3	0	2.60
Distribution Solutions Group	0	4	0	0	2.00

DXP Enterprises presently has a consensus target price of $187.00, indicating a potential upside of 1.63%. Distribution Solutions Group has a consensus target price of $35.00, indicating a potential upside of 0.98%. Given DXP Enterprises’ stronger consensus rating and higher possible upside, research analysts clearly believe DXP Enterprises is more favorable than Distribution Solutions Group.

Earnings & Valuation

This table compares DXP Enterprises and Distribution Solutions Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DXP Enterprises	$2.02 billion	1.42	$88.68 million	$5.68	32.39
Distribution Solutions Group	$1.98 billion	0.81	$8.35 million	$0.19	182.42

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

Institutional and Insider Ownership

74.8% of DXP Enterprises shares are owned by institutional investors. Comparatively, 91.6% of Distribution Solutions Group shares are owned by institutional investors. 22.0% of DXP Enterprises shares are owned by company insiders. Comparatively, 78.8% of Distribution Solutions Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
DXP Enterprises	4.35%	18.51%	5.70%
Distribution Solutions Group	0.44%	9.33%	3.41%

Volatility and Risk

DXP Enterprises has a beta of 1.02, suggesting that its share price is 2% more volatile than the S&P 500. Comparatively, Distribution Solutions Group has a beta of 0.54, suggesting that its share price is 46% less volatile than the S&P 500.

Summary

DXP Enterprises beats Distribution Solutions Group on 11 of the 14 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 Distribution Solutions Group

Distribution Solutions Group, Inc., a specialty distribution company, engages in the provision of value-added distribution solutions in North America, Europe, Asia, South America, and the Middle East. The company provides its solutions to the maintenance, repair, and operations (MRO); original equipment manufacturer (OEM); and industrial technology markets. It operates through three segments: Lawson, Gexpro Services, and TestEquity. The Lawson segment distributes of specialty products and services to the industrial, commercial, institutional, and government MRO market. The TestEquity segment distributes test and measurement equipment and solutions, industrial and electronic production supplies, and vendor managed inventory programs, as well as converting, fabrication, and adhesive solutions under the TestEquity, Hisco, TEquipment, Techni-Tool, Jensen Tools, and Instrumex brands. The Gexpro Services segment provides supply chain management solutions that offer VMI, kitting, global logistics management, manufacturing localization and import expertise, value engineering, and quality assurance. The company was formerly known as Lawson Products, Inc. and has changed to Distribution Solutions Group, Inc. 2022 Distribution Solutions Group, Inc. was incorporated in 1952 and is headquartered in Fort Worth, Texas.