DXPE: Sell
Published 16 Sep 2026, 17:02 BST. This is the frozen version, not the current recommendation.
Why this assessment was issued
First recorded assessment.
The central target is 41.6% below the price, meeting the 25% downside requirement. That decline also exceeds or matches the stronger-case upside of 0.0%. This is a valuation view, not a finding that the business is poor.
Supporting evidence
Year-to-date profit has improved
Across 2 completed quarters since 2025-12-31, net income was 48.7m versus 44.2m in the matching prior-year periods (USD). Check whether the latest quarter changes that direction.
The stock is leading its sector
Over one year, the stock changed +58.5% against +13.7% for Industrials (XLI). The gap is +44.8 percentage points. These are price returns, before dividends.
Opposing evidence
Price has outpaced earnings
Over 1 year (2025-09-12 to 2026-09-11), price changed +58.5% and trailing EPS changed +4.5%. A wider gap changes the earnings multiple; it does not establish fair value.
Borrowing is higher relative to earnings
Net debt / EBITDA: 2.9× for DXPE, against 0.8× across 12 comparable peers.
The original scenarios
| Scenario | Sales growth | Profit margin | Model value |
|---|---|---|---|
| Weaker | 5.7% | 3.7% | $68.21 |
| Central | 10.7% | 4.1% | $109.28 |
| Stronger | 15.7% | 4.6% | $160.74 |
Method: Earnings and historical valuation. A sufficiently complete, positive earnings record allows the stock's own P/E history to be used. These scenarios are not probability intervals.
Original assumptions and checks
| eps | 5.75 |
|---|---|
| cash | 226618000.0 |
| debt | 899001000.0 |
| years | 1.212867898699521 |
| growth | 10.727008633758118 |
| margin | 4.354925340063471 |
| profit | 93162000.0 |
| cash_ok | True |
| debt_ok | False |
| growths | [8.62465243638133, 11.992847951005924, 9.46116931651031, 15.596913463890827] |
| revenue | 2139233000.0 |
| downside | 63.54328526955493 |
| leverage | 2.888044636107484 |
| multiple | 17.696857670979664 |
| free_cash | 118659000.0 |
| buy_hurdle | 29.311106075886375 |
| volatility | 48.62221215177275 |
| history_end | 2026-09-11 |
| reward_risk | 0.0 |
| annual_years | 5 |
| usable_weeks | 157 |
| history_start | 2023-09-15 |
| history_weeks | 157 |
| financial_date | 2026-06-30 |
| interest_cover | 2.924472049689441 |
| operating_cash | 134600000.0 |
| uncapped_growth | 10.727008633758118 |
| current_multiple | 32.53739130434783 |
| projected_margin | 4.133273861792185 |
| historical_margin | 3.9116223835208985 |
Recent price · Passed. Weekly close dated 2026-09-11.
Suitable business model · Passed. Value operating cash flow or comparable earnings; deduct debt and other ownership claims where appropriate.
Four quarters · Passed. Four quarters ending 2026-06-30.
Current financials · Passed. Statements through 2026-06-30; factor prices dated 2026-09-11.
Annual record · Passed. 5 consecutive annual profit margins, including loss years.
Comparable earnings history · Passed. P/E is usable in 157 of 157 weeks. At least 52 usable weeks and 70% coverage are required; excluding too many loss or missing weeks would bias the target.
Earnings and price dates · Passed. Earnings-release EPS $5.75, for four quarters ending 2026-06-30.
Price risk · Passed. Risk uses the latest 52 weekly price changes.
Comparable sales growth · Passed. Growth uses the median of four quarterly year-on-year comparisons.
Positive statement earnings · Passed. Trailing statement profit is positive.
Earnings reconciliation · Passed. Release EPS is $5.75; statement-derived EPS is $6.00. The difference is within the 5% review threshold; this does not prove there are no unusual items.
Statement totals · Passed. The latest four quarters agree with the trailing snapshot within 5%.
Cash and borrowing · Passed. Cash generation, debt and interest-cover figures are available.
Target publication review · Passed. The model estimate is within SM's automatic publication range of one quarter to four times the current price. This is a review threshold, not evidence that the market price is correct.
Policy sm-review-2-research · Model sm-assessment-14-operating-capital · Data c979b9f0c915.