NYSE:DCO

Stock Analysis Report

Executive Summary

Ducommun Incorporated provides engineering and manufacturing products and services primarily to the aerospace, defense, industrial, natural resources, medical, and other industries in the United States.

Rewards

Trading at 27.9% below its fair value

Earnings are forecast to grow 10.97% per year

Earnings grew by 35.9% over the past year

Risk Analysis

Debt is not well covered by operating cash flow



Snowflake Analysis

Solid track record and good value.


Similar Companies

Share Price & News

How has Ducommun's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: DCO has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-1.6%

DCO

2.2%

US Aerospace & Defense

1.7%

US Market


1 Year Return

9.9%

DCO

36.3%

US Aerospace & Defense

23.2%

US Market

Return vs Industry: DCO underperformed the US Aerospace & Defense industry which returned 37.9% over the past year.

Return vs Market: DCO underperformed the US Market which returned 24.7% over the past year.


Shareholder returns

DCOIndustryMarket
7 Day-1.6%2.2%1.7%
30 Day-17.1%7.6%4.2%
90 Day5.4%11.5%11.9%
1 Year9.9%9.9%38.8%36.3%25.8%23.2%
3 Year44.8%44.8%60.0%51.4%52.8%42.9%
5 Year55.5%55.5%98.6%79.6%75.2%55.8%

Price Volatility Vs. Market

How volatile is Ducommun's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Ducommun undervalued compared to its fair value and its price relative to the market?

27.1%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: DCO ($40.82) is trading below our estimate of fair value ($56.6)

Significantly Below Fair Value: DCO is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: DCO is good value based on its PE Ratio (19.3x) compared to the Aerospace & Defense industry average (20.7x).

PE vs Market: DCO is poor value based on its PE Ratio (19.3x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: DCO is poor value based on its PEG Ratio (1.8x)


Price to Book Ratio

PB vs Industry: DCO is good value based on its PB Ratio (1.7x) compared to the US Aerospace & Defense industry average (2.7x).


Next Steps

Future Growth

How is Ducommun forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

11.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: DCO's forecast earnings growth (11% per year) is above the savings rate (1.7%).

Earnings vs Market: DCO's earnings (11% per year) are forecast to grow slower than the US market (14.3% per year).

High Growth Earnings: DCO's earnings are forecast to grow, but not significantly.

Revenue vs Market: DCO's revenue (3.2% per year) is forecast to grow slower than the US market (7.5% per year).

High Growth Revenue: DCO's revenue (3.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: DCO's Return on Equity is forecast to be low in 3 years time (11.8%).


Next Steps

Past Performance

How has Ducommun performed over the past 5 years?

30.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: DCO has high quality earnings.

Growing Profit Margin: DCO's current net profit margins (3.5%) are higher than last year (2.9%).


Past Earnings Growth Analysis

Earnings Trend: DCO's earnings have grown significantly by 30.3% per year over the past 5 years.

Accelerating Growth: DCO's earnings growth over the past year (35.9%) exceeds its 5-year average (30.3% per year).

Earnings vs Industry: DCO earnings growth over the past year (35.9%) exceeded the Aerospace & Defense industry 13.9%.


Return on Equity

High ROE: DCO's Return on Equity (8.5%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Ducommun's financial position?


Financial Position Analysis

Short Term Liabilities: DCO's short term assets ($312.7M) exceed its short term liabilities ($133.1M).

Long Term Liabilities: DCO's short term assets ($312.7M) exceed its long term liabilities ($272.7M).


Debt to Equity History and Analysis

Debt Level: DCO's debt to equity ratio (79.2%) is considered high.

Reducing Debt: DCO's debt to equity ratio has reduced from 120.3% to 79.2% over the past 5 years.

Debt Coverage: DCO's debt is not well covered by operating cash flow (14.6%).

Interest Coverage: DCO's interest payments on its debt are well covered by EBIT (3.1x coverage).


Balance Sheet

Inventory Level: DCO has a high level of physical assets or inventory.

Debt Coverage by Assets: DCO's debt is covered by short term assets (assets are 1.4x debt).


Next Steps

Dividend

What is Ducommun's current dividend yield, its reliability and sustainability?


Dividend Yield vs Market

company0%marketbottom25%1.4%markettop25%3.6%industryaverage1.7%forecastin3Yearsn/a

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate DCO's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate DCO's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if DCO's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if DCO's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: DCO is not paying a notable dividend for the US market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of DCO's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

What is the CEO of Ducommun's salary, the management and board of directors tenure and is there insider trading?

2.8yrs

Average management tenure


CEO

Steve Oswald (55yo)

3yrs

Tenure

US$5,006,605

Compensation

Mr. Stephen G. Oswald, also known as Steve, has been Chief Executive Officer and President at Ducommun Incorporated since January 23, 2017 and Chairman of the Board since May 2, 2018. Mr. Oswald served as  ...


CEO Compensation Analysis

Compensation vs Market: Steve's total compensation ($USD5.01M) is above average for companies of similar size in the US market ($USD1.70M).

Compensation vs Earnings: Steve's compensation has been consistent with company performance over the past year.


Management Age and Tenure

2.8yrs

Average Tenure

56yo

Average Age

Experienced Management: DCO's management team is considered experienced (2.8 years average tenure).


Board Age and Tenure

6.8yrs

Average Tenure

64.5yo

Average Age

Experienced Board: DCO's board of directors are considered experienced (6.8 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

SellUS$27,97220 Sep 19
Robert Ducommun
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares600
Max PriceUS$46.62
SellUS$46,50018 Sep 19
Robert Ducommun
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares1,000
Max PriceUS$46.50
SellUS$98,32520 Aug 19
Rosalie Rogers
EntityIndividual
Role
Head of Human Resources
VP & Chief Human Resources Officer
Shares2,300
Max PriceUS$42.75
SellUS$90,58027 Jun 19
Robert Ducommun
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares2,000
Max PriceUS$45.29
SellUS$107,86931 May 19
Christopher Wampler
EntityIndividual
Role
Chief Financial Officer
VP, Controller
Shares2,346
Max PriceUS$45.98
SellUS$31,23625 Mar 19
Robert Ducommun
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares685
Max PriceUS$45.60

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Steve Oswald (55yo)

    Chairman

    • Tenure: 3yrs
    • Compensation: US$5.01m
  • Rose Rogers (57yo)

    VP & Chief Human Resources Officer

    • Tenure: 5yrs
    • Compensation: US$1.01m
  • Jerry Redondo (59yo)

    Senior VP of Operations & Head of Ducommun Structures

    • Tenure: 2.6yrs
    • Compensation: US$1.30m
  • Christopher Wampler (52yo)

    VP, Controller

    • Tenure: 0.6yrs
    • Compensation: US$875.24k
  • Rajiv Tata

    Secretary


    Board Members

    • Bob Paulson (73yo)

      Lead Director

      • Compensation: US$140.94k
    • Rick Baldridge (60yo)

      Independent Director

      • Tenure: 6.8yrs
      • Compensation: US$131.44k
    • Robert Ducommun (67yo)

      Independent Director

      • Tenure: 35yrs
      • Compensation: US$139.83k
    • Dean Flatt (68yo)

      Independent Director

      • Tenure: 10.2yrs
      • Compensation: US$122.19k
    • Greg Churchill (62yo)

      Independent Director

      • Tenure: 6.8yrs
      • Compensation: US$112.19k
    • Jay Haberland (69yo)

      Independent Director

      • Tenure: 10.9yrs
      • Compensation: US$135.19k
    • Steve Oswald (55yo)

      Chairman

      • Tenure: 3yrs
      • Compensation: US$5.01m
    • Shirley Drazba (60yo)

      Independent Director

      • Tenure: 1.3yrs
      • Compensation: US$42.79k

    Company Information

    Ducommun Incorporated's company bio, employee growth, exchange listings and data sources


    Key Information

    • Name: Ducommun Incorporated
    • Ticker: DCO
    • Exchange: NYSE
    • Founded: 1849
    • Industry: Aerospace and Defense
    • Sector: Capital Goods
    • Market Cap: US$479.643m
    • Shares outstanding: 11.56m
    • Website: https://www.ducommun.com

    Number of Employees


    Location

    • Ducommun Incorporated
    • 200 Sandpointe Avenue
    • Suite 700
    • Santa Ana
    • California
    • 92707
    • United States

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    DCONYSE (New York Stock Exchange)YesCommon StockUSUSDJan 1969
    DUMDB (Deutsche Boerse AG)YesCommon StockDEEURJan 1969

    Biography

    Ducommun Incorporated provides engineering and manufacturing products and services primarily to the aerospace, defense, industrial, natural resources, medical, and other industries in the United States. The company operates through two segments, Electronic Systems and Structural Systems. The Electronic Systems segment offers cable assemblies and interconnect systems; printed circuit board assemblies; high-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, wire harnesses, 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, and engine components. The company 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. Ducommun Incorporated was founded in 1849 and is headquartered in Santa Ana, California. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/17 01:30
    End of Day Share Price2020/01/16 00:00
    Earnings2019/09/28
    Annual Earnings2018/12/31


    Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.