Glasshouse says Ducommun earnings power ‘overstated,’ expects valuation reset

Glasshouse Research is short Ducommun (DCO), saying “growth story built on aggressive accounting and a culture of hitting numbers at all costs. In a recently published report, Glasshouse says, “Ducommun sells a growth story built on contract assets, bloated inventory, and ASC 606 accounting levers rather than real demand. Former insiders describe a top-down mandate to ‘find the number,’ leaving investors with overstated earnings power and rising risk as customers like Boeing (BA) and RTX (RTX) delay shipments.” “In our view, Ducommun’s earnings power is overstated, its cash flow quality is deteriorating, and its balance sheet is swelling with risk. The company’s narrative of operational momentum will prove unsustainable, and the stock – currently priced for growth and stability – is set up for a painful ‘big bath’ period and valuation reset,” the report reads.