Contrasting MSC Industrial Direct (MSM) & DXP Enterprises (DXPE)

MSC Industrial Direct (NYSE: MSM) and DXP Enterprises (NASDAQ:DXPE) are both industrial products companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, risk, valuation, profitability, earnings, analyst recommendations and institutional ownership.

Dividends

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MSC Industrial Direct pays an annual dividend of $2.32 per share and has a dividend yield of 2.6%. DXP Enterprises does not pay a dividend. MSC Industrial Direct pays out 57.3% of its earnings in the form of a dividend. MSC Industrial Direct has raised its dividend for 7 consecutive years.

Insider and Institutional Ownership

75.3% of MSC Industrial Direct shares are owned by institutional investors. Comparatively, 76.0% of DXP Enterprises shares are owned by institutional investors. 31.4% of MSC Industrial Direct shares are owned by company insiders. Comparatively, 9.6% of DXP Enterprises shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares MSC Industrial Direct and DXP Enterprises’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MSC Industrial Direct 9.91% 20.53% 12.32%
DXP Enterprises 1.68% 5.99% 2.50%

Analyst Recommendations

This is a breakdown of current ratings and price targets for MSC Industrial Direct and DXP Enterprises, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MSC Industrial Direct 0 9 6 0 2.40
DXP Enterprises 0 0 2 0 3.00

MSC Industrial Direct presently has a consensus price target of $100.50, suggesting a potential upside of 12.54%. DXP Enterprises has a consensus price target of $48.50, suggesting a potential upside of 27.16%. Given DXP Enterprises’ stronger consensus rating and higher possible upside, analysts plainly believe DXP Enterprises is more favorable than MSC Industrial Direct.

Valuation & Earnings

This table compares MSC Industrial Direct and DXP Enterprises’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MSC Industrial Direct $2.89 billion 1.75 $231.43 million $4.05 22.05
DXP Enterprises $1.01 billion 0.66 $16.88 million $0.86 44.35

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

Risk & Volatility

MSC Industrial Direct has a beta of 0.59, indicating that its share price is 41% less volatile than the S&P 500. Comparatively, DXP Enterprises has a beta of 2.25, indicating that its share price is 125% more volatile than the S&P 500.

Summary

MSC Industrial Direct beats DXP Enterprises on 11 of the 17 factors compared between the two stocks.

MSC Industrial Direct Company Profile

MSC Industrial Direct Co., Inc., together with its subsidiaries, distributes various ranges of metalworking and maintenance, repair, and operations (MRO) products primarily in the United States, Canada, and the United Kingdom. The company's MRO products comprise cutting tools, measuring instruments, tooling components, metalworking products, fasteners, flat stock, raw materials, abrasives, machinery hand and power tools, safety and janitorial supplies, plumbing supplies, materials handling products, power transmission components, and electrical supplies. It offers approximately 1,565,000 stock-keeping units through its catalogs; brochures; eCommerce channels, including its Website, mscdirect.com; and call-centers and branches. The company serves primarily through its distribution network of 93 branch offices and 12 customer fulfillment centers. It serves individual machine shops, manufacturing companies, and government agencies. The company was founded in 1941 and is headquartered in Melville, New York.

DXP Enterprises Company Profile

DXP Enterprises, Inc. engages in distributing maintenance, repair, and operating (MRO) products, equipment, and services to energy and industrial customers in the United States. It operates through three segments: Service Centers, Supply Chain Services, and Innovative Pumping Solutions. The Service Centers segment offers MRO products, equipment, and integrated services, including technical expertise and logistics services. It offers rotating equipment, bearing, power transmission, hose, fluid power, metal working, industrial supply, and safety products; and field safety supervision, in-house and field repair, and predictive maintenance services. This segment provides its MRO products for use in the oil and gas, food and beverage, petrochemical, transportation, and other general industrial industries, as well as for mining, construction, chemical, municipal, agriculture, and pulp and paper. The Supply Chain Services segment manages procurement and inventory management solutions; and offers inventory optimization and management, store room management, transaction consolidation and control, vendor oversight and procurement cost optimization, productivity improvement, and customized reporting services. This segment designs programs, such as SmartAgreement, a procurement solution for 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 Innovative Pumping Solutions segment provides pump packages comprising diesel and electric driven firewater, pipeline booster, potable water, pigging, lease automatic custody transfer charge unit, chemical injection wash down unit, seawater lift, jockey, condensate, cooling water, and seawater/produced water injection pump packages. The company was founded in 1908 and is headquartered in Houston, Texas.

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