The last three years for investors in DXP Enterprises (NASDAQ:DXPE) have not been profitable

Many investors define a successful investment as beating the market average over the long term. But it is virtually certain that you will sometimes buy stocks that are below average market returns. Unfortunately, this has been the case for longer DXP Enterprises, Inc. (NASDAQ:DXPE) shareholders, as the stock price has fallen 26% over the past three years, well below the market return of about 41%. Shareholders have had an even tougher race lately, with the share price falling 11% in the past 90 days.

Given that shareholders are down longer term, let’s take a look at the underlying fundamentals over this period and see if they have been consistent with returns.

In his test The Graham-and-Doddsville super-investors Warren Buffett has described how stock prices don’t always rationally reflect a company’s value. One way to look at how market sentiment has changed over time is to look at the interaction between a company’s stock price and its earnings per share (EPS).

Over five years of share price growth, DXP ​​Enterprises has gone from loss to profitability. This would generally be seen as a positive, so we’re surprised to see the stock price down. So, given that the stock price is falling, it’s also worth checking out other metrics.

Arguably, the revenue decline of 4.1% per year makes people think that DXP Enterprises is shrinking. And that’s not surprising, as it seems unlikely that EPS growth can continue for long in the absence of revenue growth.

The image below shows how earnings and income have tracked over time (if you click on the image you can see more details).

NasdaqGS: DXPE Earnings and Revenue Growth September 12, 2022

We know that DXP Enterprises has recently improved its results, but what does the future hold? You can see what analysts are predicting for DXP Enterprises in this interactive graph of future earnings estimates.

A different perspective

While it hurts that DXP Enterprises posted a 3.7% loss over the past twelve months, the broader market was actually worse, posting a 14% loss. Unfortunately, last year’s performance may indicate unresolved challenges, given that it is worse than the 2% annualized loss over the past half-decade. As Baron Rothschild tells the investor to “buy when there’s blood in the streets, even if the blood is yours”, buyers should carefully examine the data to be sure the company itself is sound. . While it is worth considering the various impacts that market conditions can have on the stock price, there are other, even more important factors. For example, we have identified 1 warning sign for DXP Enterprises of which you should be aware.

Sure DXP Enterprises may not be the best stock to buy. So you might want to see this free collection of growth values.

Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on US exchanges.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

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