Ducommun (DCO) AI Stock Analysis

• Market Cap: $816.44M
• Dividend Yield: N/A
• Average Volume (3M): 80.74K
• Price to Earnings (P/E): 26.6
• Beta (1Y): 0.76
• Revenue Growth: 3.90%
• EPS Growth: 81.41%
• Country: US
• Employees: 2,180
• Sector: Industrials
• Sector Strength: 66
• Industry: Aerospace & Defense
• EPS (TTM): 2.10
• Shares Outstanding: 14,863,345
• 10 Day Avg. Volume: 84,836
• 30 Day Avg. Volume: 80,738
• PEG Ratio: 0.33
• Price to Book (P/B): N/A
• Price to Sales (P/S): 1.11
• Price to Cash Flow (P/CF): 11.80
• P/FCF Ratio: 11.90
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $71.00
• Price Target Upside: 26.99% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 2

Ducommun's solid financial performance and positive earnings call, featuring improved profitability and strategic growth plans, are significant strengths. However, the technical indicators show bearish trends, and the stock's valuation appears slightly high, impacting the overall score.

Positive Factors

Financial performance

DCO has a plan to expand its operating margins significantly over the medium-term, with recent results showing substantial progress on this front.

Growth outlook

DCO is expected to benefit from its exposure to aerospace original equipment as the OEMs ramp up production significantly to meet strong demand.

Valuation

The stock is one of the least expensive in the aerospace supply chain on key valuation metrics.

Negative Factors

Acquisition strategy

Building an acquisition compounder model since 2017 could pose risks if accretive deployment does not meet expectations.

Market valuation

DCO trades at only 7.8X 2025 EV/EBITDA, which is lower compared to peers like TGI (8.4X) and HXL (13.5X), and significantly below the highest quality aftermarket-rich suppliers in the 17-20X range.

Ducommun Business Overview & Revenue Model

Company Description

Ducommun Incorporated provides engineering and manufacturing products and services primarily to the aerospace and defense, industrial, medical, and other industries in the United States. It operates through two segments, Electronic Systems and Structural Systems. The Electronic Systems segment provides cable assemblies and interconnect systems; printed circuit board assemblies; higher-level electronic, electromechanical, and mechanical components and assemblies, as well as lightning diversion systems; and radar enclosures, aircraft avionics racks, shipboard communications and control enclosures, shipboard communications and control enclosures, printed circuit board assemblies, cable assemblies, wire harnesses, interconnect systems, lightning diversion strips, surge suppressors, conformal shields, and other assemblies. It also supplies engineered products, including illuminated pushbutton switches and panels for aviation and test systems; microwave and millimeter switches and filters for radio frequency systems and test instrumentation; and motors and resolvers for motion control. In addition, this segment provides engineering expertise for aerospace system design, development, integration, and testing. The Structural Systems segment designs, engineers, and manufactures contoured aluminum, titanium, and Inconel aero structure components; structural assembly products, such as winglets, engine components, and fuselage structural panels; and metal and composite bonded structures and assemblies comprising aircraft wing spoilers, large fuselage skins, rotor blades on rotary-wing aircraft and components, flight control surfaces, engine components, ammunition handling systems, and magnetic seals. It serves commercial aircraft, military fixed-wing aircraft, military and commercial rotary-wing aircraft, and space programs, as well as industrial, medical, and other end-use markets. The company was founded in 1849 and is headquartered in Santa Ana, California.

How the Company Makes Money

Ducommun generates revenue by leveraging its expertise in engineering and manufacturing to deliver high-quality aerospace and defense products and services. The company's primary revenue streams include the sale of structural components and electronic systems to major aerospace and defense contractors, as well as providing aftermarket support and services. Ducommun's strategic partnerships with industry leaders in both the commercial and defense sectors enhance its market presence and contribute significantly to its earnings. The company's focus on innovation and quality ensures a steady demand for its products and services, while its long-term contracts with key customers provide financial stability and growth opportunities.

Ducommun Financial Statement Overview

Summary

Overall, Ducommun demonstrates solid financial performance with consistent revenue growth and improved profitability. The company maintains strong equity and capital management, ensuring financial stability. Cash flow generation is robust, although there is potential to enhance the conversion of earnings into free cash flow. The financial position is strong, with room for growth in profitability and cash efficiency.

Income Statement

Ducommun's revenue has shown consistent growth with a 3.9% increase from the previous year. The gross profit margin improved to 25.1% in the most recent annual report, indicating efficient cost management. Net profit margin increased to 4.0%, showing improved profitability. However, the EBIT margin is relatively moderate at 6.6%, and the EBITDA margin is stable at 6.6% due to depreciation and amortization effects.

Balance Sheet

The company maintains a healthy equity ratio of 60.6%, reflecting a strong capital structure. The debt-to-equity ratio has improved significantly, reducing to a low level, showing effective leverage management. Return on Equity (ROE) has improved to 4.6%, signaling improved efficiency in using equity to generate profits. The balance sheet shows robust financial stability despite moderate leverage.

Cash Flow

Free cash flow increased by 73.7% year-on-year, indicating strong cash generation capability. The operating cash flow to net income ratio stands at 1.09, showing that cash earnings align well with net income. However, the free cash flow to net income ratio of 0.64 suggests room for improvement in converting profits into free cash flow.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
786.55M	756.99M	712.54M	645.41M	628.94M
	Gross Profit
197.26M	163.19M	144.30M	142.46M	137.74M
	EBIT
52.21M	28.92M	19.93M	48.88M	19.21M
	EBITDA
52.21M	69.72M	83.58M	213.41M	76.78M
	Net Income Common Stockholders
31.50M	15.93M	28.79M	135.54M	29.17M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
37.14M	42.86M	46.25M	76.32M	56.47M
	Total Assets
1.13B	1.12B	1.02B	978.74M	837.35M
	Total Debt
42.31M	295.59M	282.84M	320.59M	336.61M
	Net Debt
5.18M	252.73M	236.59M	244.28M	280.14M
	Total Liabilities
443.57M	484.82M	495.55M	504.13M	508.01M
	Stockholders Equity
682.53M	636.09M	525.96M	474.60M	329.33M
Cash Flow		Free Cash Flow
20.05M	11.54M	12.99M	-17.43M	101.00K
	Operating Cash Flow
34.18M	31.07M	32.68M	-565.00K	12.61M
	Investing Cash Flow
-13.91M	-133.50M	-19.24M	57.75M	-5.47M
	Financing Cash Flow
-26.00M	99.05M	-43.51M	-37.34M	9.74M

Ducommun Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 55.91
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DCO, the sentiment is Negative. The current price of 55.91 is below the 20-day moving average (MA) of 56.59, below the 50-day MA of 58.71, and below the 200-day MA of 62.84, indicating a bearish trend. The MACD of -1.00 indicates Negative momentum. The RSI at 44.68 is Neutral, neither overbought nor oversold. The STOCH value of 49.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DCO.

Ducommun Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DCO	69 Neutral	$816.44M	26.65	4.78%	―	3.90%	81.41%
TATT	63 Neutral	$302.06M	26.57	11.02%	―	33.68%	101.78%
Sector *	63 Neutral	$4.14B	11.23	5.47%	215.40%	4.10%	-8.63%
NPK	62 Neutral	$598.98M	14.42	11.45%	1.19%	13.88%	19.64%
SWBI	62 Neutral	$424.41M	14.84	8.05%	5.39%	-5.77%	14.45%
ATRO	55 Neutral	$711.33M	―	-6.41%	―	15.41%	43.28%
EVTL	25 Underperform	$290.02M	―	115.25%	―	―	23.26%

Ducommun Corporate Events

Ducommun Strengthens Board Amid Leadership Changes

Ducommun Incorporated has appointed Daniel G. Korte and Daniel L. Boehle to its Board of Directors, bringing expertise in aerospace and defense to support its VISION 2027 Strategy. As part of a broader board refreshment, these appointments aim to enhance Ducommun’s operational and financial capabilities, contributing to its ongoing growth and shareholder value. The company also expressed gratitude to retiring directors Robert C. Ducommun and Dean M. Flatt for their pivotal roles in the company’s transformation.