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Is DXPE a good stock to buy? We came across a bullish thesis on DXP Enterprises, Inc. on InfoArb Sheets’s Substack. In this article, we will summarize the bulls’ thesis on DXPE. DXP Enterprises, Inc.'s share was trading at $173.69 as of June 18th. DXPE’s trailing P/E was 32.64 according to Yahoo Finance.

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DXP Enterprises is an industrial products and services distributor serving maintenance, repair, operating, and production markets across industrial, energy, water/wastewater, general industry, and infrastructure end markets through its Service Centers, Innovative Pumping Solutions (IPS), and Supply Chain Services segments.

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The Q1 2026 results reinforce a steadily compounding industrial platform, with sales rising 9.5% year over year to $521.7 million, adjusted EBITDA increasing to $57.8 million, and free cash flow improving sharply to $26.3 million from a prior-year outflow, highlighting meaningful underlying cash generation strength. While GAAP EPS was broadly flat at $1.22 versus $1.25, the divergence from adjusted EBITDA performance reflects acquisition-related costs and financing headwinds rather than operational deterioration, with margins holding firm at 11.1%.

More importantly, the call signals accelerating momentum through the quarter, as January weakness gave way to stronger February and March trends, with average daily sales improving from $7.2 million to $9.2 million and bookings extending into April, suggesting a potential inflection into Q2.

The investment case is increasingly centered on mix expansion and backlog visibility, particularly within IPS where water accounted for 66% of sales and has delivered 14 consecutive quarters of sequential growth, positioning DXP toward higher-value engineered solutions with longer-cycle revenue durability.

This transition, combined with strong energy and water backlog and growing exposure to data center-related cooling and infrastructure demand, supports a constructive multi-year growth runway. Supply Chain Services also shows recovery signals with sequential improvement and onboarding momentum, while acquisitions contributed $40.7 million in higher-margin revenue, reinforcing earnings quality improvement.

Although project timing variability and early-quarter softness introduce near-term noise, the broader trajectory points to strengthening demand, improving mix, and sustained cash flow conversion. With improving backlog conversion visibility, accelerating end-market exposure, and expanding higher-margin IPS contributions, DXP is positioned for continued re-rating potential as investors gain confidence in its ability to translate operational momentum into durable growth and compounding free cash flow generation.

Previously, we covered a bullish thesis on WESCO International, Inc. (WCC) by Stock Analysis Compilation in December 2024, which highlighted EV, solar, and data center-driven growth alongside a valuation disconnect. WCC’s stock price has appreciated by approximately 79.94% since our coverage. InfoArb Sheets shares a similar view but emphasizes industrial backlog visibility, water and energy exposure, and cash flow inflection in DXP Enterprises now.

DXP Enterprises, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 22 hedge fund portfolios held DXPE at the end of the first quarter which was 17 in the previous quarter. While we acknowledge the risk and potential of DXPE as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DXPE and that has 10,000% upside potential, check out our report about this cheapest AI stock.

Disclosure: None.