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Ducommun (DCO)
NYSE:DCO
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Ducommun (DCO) AI Stock Analysis

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DCO

Ducommun

(NYSE:DCO)

Rating:73Outperform
Price Target:
$102.00
▲(13.66% Upside)
Ducommun's overall stock score is driven by strong financial performance and positive earnings call insights, particularly in the defense segment. Technical indicators support a bullish trend, although valuation concerns due to a high P/E ratio slightly temper the outlook. The absence of a dividend yield also 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 (DCO) vs. SPDR S&P 500 ETF (SPY)

Ducommun Business Overview & Revenue Model

Company DescriptionDucommun 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 MoneyDucommun generates revenue through the sale of its engineered components and systems to major clients in the aerospace and defense industries. The company’s revenue model includes long-term contracts and project-based work, where it provides both manufacturing and engineering services. Key revenue streams come from the production of airframe assemblies, electrical interconnect systems, and other specialized products tailored to customer specifications. Additionally, partnerships with leading aerospace manufacturers and defense contractors enhance Ducommun's market presence and stability. The company benefits from a diverse customer base that includes both commercial and government sectors, allowing it to capitalize on various defense contracts and aerospace programs.

Ducommun Earnings Call Summary

Earnings Call Date:Aug 07, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Nov 05, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a strong performance in the defense segment and record financial metrics, overshadowed by challenges in the commercial aerospace sector and decreased backlog. However, strategic initiatives and improved cash flow indicate a positive outlook.
Q2-2025 Updates
Positive Updates
Record-Breaking Revenue and Growth
Revenues reached a new quarterly record of $202.3 million, a 2.7% increase over the prior year. This marks the 17th consecutive quarter of year-over-year revenue growth.
Strong Defense Segment Performance
Defense business grew 16% during the quarter, driven by a 39% increase in the missile franchise and a 46% increase in the radar business.
Record Gross and Adjusted EBITDA Margins
Gross margin grew to 26.6%, and adjusted EBITDA hit a record 16% of revenue, representing an 80 basis point expansion over the prior year.
Improved Cash Flow and Lower Interest Costs
Generated $22.4 million in cash flow from operating activities, and interest expense decreased due to lower interest rates and debt balance.
Negative Updates
Commercial Aerospace Revenue Decline
Commercial aerospace business revenue declined 10% in the quarter due to lower rates on Boeing platforms and destocking.
Decreased Backlog
Consolidated backlog decreased by $50 million year-over-year, with the commercial aerospace backlog decreasing by $47 million due to lower OEM production rates and destocking.
Challenges with Facility Consolidation
Structural Systems segment saw a decline in revenue and operating income due to an unfavorable sales mix and facility consolidation challenges.
Company Guidance
During the Q2 2025 Ducommun earnings call, the company provided detailed guidance and insights into its current performance and future outlook. Ducommun reported a record quarterly revenue of $202.3 million, marking a 2.7% increase year-over-year, with this being the 17th consecutive quarter of year-over-year growth. The company's defense business drove this growth, with a 16% increase, particularly noting a 39% rise in its missile franchise and a 46% growth in radar systems. Despite a 10% decline in the commercial aerospace segment, the outlook remains positive as Boeing is expected to improve build rates. Gross margin stood at 26.6%, matching a record high, supported by a 23% revenue contribution from engineered products. Adjusted EBITDA reached a record level of 16%, with a goal of achieving 18% by 2027. GAAP diluted EPS increased to $0.82, with adjusted EPS at $0.88, driven by improved operating income and lower interest expenses. The company's backlog was $1.02 billion, with strong pipeline prospects anticipated to boost orders in the latter half of the year. Looking ahead, Ducommun expects mid-single-digit growth in Q3 and low double-digit growth in Q4, buoyed by defense momentum and a recovering commercial aerospace sector.

Ducommun Financial Statement Overview

Summary
Ducommun demonstrates strong financial performance with consistent revenue growth, improved profitability, and effective cost management. The balance sheet reflects a stable equity base with manageable leverage, while cash flow metrics highlight robust cash generation and efficient capital management. Potential risks include maintaining leverage levels and sustaining growth momentum.
Income Statement
78
Positive
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
72
Positive
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
75
Positive
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue795.08M786.55M756.99M712.54M645.41M628.94M
Gross Profit204.42M197.26M163.19M144.30M142.46M137.74M
EBITDA86.33M85.65M69.72M83.58M213.41M76.78M
Net Income39.99M31.50M15.93M28.79M135.54M29.17M
Balance Sheet
Total Assets1.14B1.13B1.12B1.02B978.74M837.35M
Cash, Cash Equivalents and Short-Term Investments37.12M37.14M42.86M46.25M76.32M56.47M
Total Debt256.30M272.14M295.59M282.84M320.59M336.61M
Total Liabilities433.00M443.57M484.82M495.55M504.13M508.01M
Stockholders Equity707.83M682.53M636.09M525.96M474.60M329.33M
Cash Flow
Free Cash Flow40.63M20.05M11.54M12.99M-17.43M101.00K
Operating Cash Flow55.55M34.18M31.07M32.68M-565.00K12.61M
Investing Cash Flow-12.62M-13.91M-133.50M-19.24M57.75M-5.47M
Financing Cash Flow-35.22M-26.00M99.05M-43.51M-37.34M9.74M

Ducommun Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price89.74
Price Trends
50DMA
88.61
Positive
100DMA
77.16
Positive
200DMA
70.18
Positive
Market Momentum
MACD
1.00
Positive
RSI
52.10
Neutral
STOCH
48.25
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DCO, the sentiment is Neutral. The current price of 89.74 is below the 20-day moving average (MA) of 91.22, above the 50-day MA of 88.61, and above the 200-day MA of 70.18, indicating a neutral trend. The MACD of 1.00 indicates Positive momentum. The RSI at 52.10 is Neutral, neither overbought nor oversold. The STOCH value of 48.25 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for DCO.

Ducommun Risk Analysis

Ducommun disclosed 38 risk factors in its most recent earnings report. Ducommun reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Ducommun Peers Comparison

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
75
Outperform
$469.74M29.7210.47%25.96%68.93%
73
Outperform
$1.36B34.445.86%2.42%72.72%
64
Neutral
$10.66B15.608.14%2.00%2.79%-14.82%
62
Neutral
$1.29B-1.41%10.99%69.85%
62
Neutral
$749.41M17.9911.68%0.94%31.27%26.36%
62
Neutral
$360.39M27.213.48%6.48%-11.73%-64.84%
25
Underperform
$468.89M115.25%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
DCO
Ducommun
89.74
26.18
41.19%
ATRO
Astronics
36.80
15.97
76.67%
NPK
National Presto
106.11
31.57
42.35%
SWBI
Smith & Wesson Brands
8.02
-5.53
-40.81%
TATT
Tat Techno
35.56
19.49
121.28%
EVTL
Vertical Aerospace
4.66
-3.14
-40.26%

Ducommun Corporate Events

Executive/Board ChangesBusiness Operations and Strategy
Ducommun Strengthens Board Amid Leadership Changes
Positive
Nov 7, 2024

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.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 19, 2025