DXP Enterprises (NASDAQ: DXPE) and NOW (NYSE:DNOW) are both small-cap industrial products companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, earnings, dividends, profitabiliy, risk and institutional ownership.

Volatility and Risk

DXP Enterprises has a beta of 2.63, indicating that its share price is 163% more volatile than the S&P 500. Comparatively, NOW has a beta of 0.76, indicating that its share price is 24% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
DXP Enterprises 1.58% 6.15% 2.41%
NOW -7.14% -7.83% -5.63%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for DXP Enterprises and NOW, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DXP Enterprises 0 2 2 0 2.50
NOW 0 4 5 0 2.56

DXP Enterprises presently has a consensus target price of $41.00, suggesting a potential upside of 54.78%. NOW has a consensus target price of $19.33, suggesting a potential upside of 56.29%. Given NOW’s stronger consensus rating and higher possible upside, analysts clearly believe NOW is more favorable than DXP Enterprises.

Valuation and Earnings

This table compares DXP Enterprises and NOW’s gross 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 31.54
NOW $2.34 billion 0.57 -$81.00 million ($1.56) -7.93

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

Insider & Institutional Ownership

73.8% of DXP Enterprises shares are owned by institutional investors. Comparatively, 99.1% of NOW shares are owned by institutional investors. 11.3% of DXP Enterprises shares are owned by insiders. Comparatively, 3.3% of NOW shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

DXP Enterprises beats NOW on 7 of the 13 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.

NOW Company Profile

NOW Inc. (NOW) is a global distributor to the oil and gas and industrial markets. The Company operates under the DistributionNOW and Wilson Export brands. Its segments include the United States, Canada and International. As of December 31, 2016, its segments, the United States, Canada and International, had over 200, 55 and 35 locations, respectively. The United States segment comprises United States Energy, United States Supply Chain and United States Process Solutions. NOW’s energy product offerings are used in the oil and gas industry, including upstream drilling and completion, exploration and production, midstream infrastructure development and downstream petroleum refining, as well as in other industries, such as chemical processing, power generation and industrial manufacturing operations. It provides supply chain management to drilling contractors, exploration and production (E&P) operators, midstream operators, downstream energy and industrial manufacturing companies.

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