Ducommun (DCO) AI Stock Analysis

• Market Cap: $1.14B
• Dividend Yield: N/A
• Average Volume (3M): 76.00K
• Price to Earnings (P/E): 32.8
• Beta (1Y): 0.74
• Revenue Growth: 3.02%
• EPS Growth: 95.76%
• Country: US
• Employees: 2,180
• Sector: Industrials
• Sector Strength: 87
• Industry: Aerospace & Defense
• EPS (TTM): 0.83
• Shares Outstanding: 14,877,749
• 10 Day Avg. Volume: 84,387
• 30 Day Avg. Volume: 75,998
• PEG Ratio: -0.26
• Price to Book (P/B): 1.15
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 46.43
• Enterprise Value/Market Cap: 0.74
• Enterprise Value/Revenue: 0.27
• Enterprise Value/Gross Profit: 4.16
• Enterprise Value/Ebitda: 2.90
• 1Y Price Target: $83.50
• Price Target Upside: 9.11% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

• Rating: 71 Outperform
• Price Target: $81.00 ▲(5.84%Upside)

Ducommun's overall stock score reflects strong financial performance and positive earnings call insights, particularly in military and space revenue growth. Technical analysis suggests potential overbought conditions, and valuation indicates a high P/E ratio, which could suggest overvaluation. The absence of a dividend yield further impacts the valuation 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 makes money by providing advanced manufacturing and engineering services to major aerospace and defense contractors. The company generates revenue through contracts for the production of specialized electronic systems and structural components used in commercial and military aircraft, as well as space exploration vehicles. Ducommun's key revenue streams include sales of proprietary products, long-term contracts with major aerospace and defense companies, and maintenance and support services. Significant partnerships with leading industry players and adherence to regulatory standards further bolster its revenue generation capabilities.

Ducommun Financial Statement Overview

Summary

Ducommun exhibits strong financial performance with consistent revenue growth, improved profitability, and effective cost management. The balance sheet shows a strong equity base with manageable leverage, and cash flow metrics highlight robust cash generation. However, maintaining leverage levels and sustaining growth momentum are potential risks.

Income Statement

Ducommun's TTM (Trailing-Twelve-Months) shows a healthy Gross Profit Margin of 25.57%, indicating effective cost management. The company's Net Profit Margin improved to 4.45%, demonstrating enhanced profitability. Revenue growth is evident with a 4.60% increase from 2022 to 2023 and a continued upward trajectory into 2024. EBIT and EBITDA margins improved, reflecting operational efficiency.

Balance Sheet

The Debt-to-Equity ratio stands at 0.39, indicating a moderate leverage level. Return on Equity improved to 5.07%, highlighting better utilization of equity. The Equity Ratio of 61.38% suggests a strong equity base, providing financial stability. However, the company's leverage remains a potential risk factor.

Cash Flow

Ducommun's Free Cash Flow Growth Rate is robust, showing a 12.85% increase in the TTM, reflecting strong cash generation. The Operating Cash Flow to Net Income ratio of 1.04 signifies effective conversion of profits into cash. The Free Cash Flow to Net Income ratio stands at 0.64, indicating efficient cash retention post capital expenditures.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
789.82M	786.55M	756.99M	712.54M	645.41M	628.94M
	Gross Profit
201.92M	197.26M	163.19M	144.30M	142.46M	137.74M
	EBIT
57.42M	52.21M	28.92M	19.93M	48.88M	19.21M
	EBITDA
73.06M	85.65M	69.72M	83.58M	213.41M	76.78M
	Net Income Common Stockholders
35.16M	31.50M	15.93M	28.79M	135.54M	29.17M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
30.73M	37.14M	42.86M	46.25M	76.32M	56.47M
	Total Assets
1.13B	1.13B	1.12B	1.02B	978.74M	837.35M
	Total Debt
270.24M	272.14M	295.59M	282.84M	320.59M	336.61M
	Net Debt
239.51M	235.01M	252.73M	236.59M	244.28M	280.14M
	Total Liabilities
435.61M	443.57M	484.82M	495.55M	504.13M	508.01M
	Stockholders Equity
693.01M	682.53M	636.09M	525.96M	474.60M	329.33M
Cash Flow		Free Cash Flow
22.63M	20.05M	11.54M	12.99M	-17.43M	101.00K
	Operating Cash Flow
36.60M	34.18M	31.07M	32.68M	-565.00K	12.61M
	Investing Cash Flow
-13.75M	-13.91M	-133.50M	-19.24M	57.75M	-5.47M
	Financing Cash Flow
-24.19M	-26.00M	99.05M	-43.51M	-37.34M	9.74M

Ducommun Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 76.53
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DCO, the sentiment is Positive. The current price of 76.53 is above the 20-day moving average (MA) of 71.18, above the 50-day MA of 63.72, and above the 200-day MA of 63.71, indicating a bullish trend. The MACD of 3.28 indicates Negative momentum. The RSI at 84.10 is Negative, neither overbought nor oversold. The STOCH value of 90.50 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DCO.

Ducommun Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DCO	71 Outperform	$1.14B	32.81	5.25%	―	3.02%	95.76%
ATRO	68 Neutral	$1.27B	―	-1.35%	―	13.73%	86.81%
Sector *	66 Neutral	$4.51B	12.22	5.40%	3.63%	4.14%	-12.01%
SWBI	65 Neutral	$470.39M	16.17	8.05%	4.86%	-5.77%	14.45%
TATT	65 Neutral	$326.28M	22.29	12.30%	―	30.58%	83.94%
NPK	64 Neutral	$683.21M	15.96	12.14%	1.05%	23.15%	31.43%
EVTL	25 Underperform	$508.46M	―	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.