Why DXP Enterprises' Shares Dropped

Is this meaningful or just another movement?

Travis Hoium
Travis Hoium
May 2, 2013 at 9:30PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of equipment service provider DXP Enterprises (NASDAQ:DXPE) dropped 14% today after the company released earnings.

So what: First quarter sales increased 15% to $290.1 million, and net income was up 14%, to $13.2 million, or $0.87 per share. But both numbers were down sequentially, and analysts were expecting $314.3 million in revenue, and $0.95 per share in earnings. 

Now what: Management pointed to an uncertain economic environment as the biggest factor affecting the lower-than-expected results. Like many companies, management is cautiously optimistic about the second half of the year. I don't think the results were terrible, but the stock's trailing P/E ratio of 17 is a little expensive given the uncertainty. I'm sitting out this move today, but if the stock continues to drop in coming weeks, it would be a nice value for long-term investors.

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