Critical Review: Systemax (SYX) versus DXP Enterprises (DXPE)

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Systemax (NYSE:SYX) and DXP Enterprises (NASDAQ:DXPE) are both small-cap retail/wholesale companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, earnings, risk, dividends and valuation.

Profitability

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

Net Margins Return on Equity Return on Assets
Systemax 19.10% 23.98% 11.61%
DXP Enterprises 2.66% 10.48% 4.46%

Volatility & Risk

Systemax has a beta of 0.2, suggesting that its share price is 80% less volatile than the S&P 500. Comparatively, DXP Enterprises has a beta of 2.55, suggesting that its share price is 155% more volatile than the S&P 500.

Earnings & Valuation

This table compares Systemax and DXP Enterprises’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Systemax $1.27 billion 0.77 $40.40 million $1.30 20.02
DXP Enterprises $1.01 billion 0.61 $16.88 million $0.86 40.73

Systemax has higher revenue and earnings than DXP Enterprises. Systemax 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 and Institutional Ownership

28.4% of Systemax shares are owned by institutional investors. Comparatively, 79.5% of DXP Enterprises shares are owned by institutional investors. 68.0% of Systemax shares are owned by company insiders. Comparatively, 9.2% 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 company will outperform the market over the long term.

Dividends

Systemax pays an annual dividend of $0.44 per share and has a dividend yield of 1.7%. DXP Enterprises does not pay a dividend. Systemax pays out 33.8% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Systemax and DXP Enterprises, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Systemax 0 0 2 0 3.00
DXP Enterprises 0 0 1 0 3.00

Systemax currently has a consensus target price of $45.00, indicating a potential upside of 72.94%. DXP Enterprises has a consensus target price of $49.00, indicating a potential upside of 39.88%. Given Systemax’s higher probable upside, analysts clearly believe Systemax is more favorable than DXP Enterprises.

Summary

Systemax beats DXP Enterprises on 11 of the 15 factors compared between the two stocks.

About Systemax

Systemax Inc. operates as a direct marketer of brand name and private label products. Its Industrial Products Group segment sells a range of maintenance, repair, and operation products, including storage and shelving, material handling, janitorial and maintenance, furniture and office, HVAC/R and fans, workbench and shop desks, safety and security, outdoor and grounds maintenance, tools and instruments, office and school supplies, plumbing and pumps, packaging and supplies, electrical and lighting, food service and appliances, raw materials and building supplies, motors and power transmission, pneumatics and hydraulics, medical and laboratory equipment, metalworking and cutting tools, vehicle maintenance, and fasteners and hardware in North America. This segment offers its products under the Global, GlobalIndustrial.com, Nexel Relius, Relius Solutions, Paramount, and Interion brand names. The company's Europe Technology Products Group segment sells information and communication technology products, such as servers-storage and backup, desktop computers, laptops, tablets, monitors, and mobile devices; computer parts and memory; computer components and accessories; networking and security; software; and electronics, and commercial and home networking products. This segment also provides TV and video products; audio products; cameras and surveillance products; GPS products; cell phones; video games; and home and electronics accessories. The company offers its products to for-profit businesses, educational organizations, and government entities through its relationship marketers, catalog mailings, and proprietary Internet Websites. Systemax Inc. was founded in 1949 and is headquartered in Port Washington, New York.

About DXP Enterprises

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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