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1. Company Snapshot

1.a. 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.

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1.b. Last Insights on DCO

Ducommun Incorporated's recent stock performance was negatively impacted by its Q4 2024 earnings release, where it missed EPS expectations despite modest growth. The company reported quarterly earnings of $0.75 per share, but this fell short of analyst estimates. Additionally, the commercial aerospace and defense sectors, which are key drivers for Ducommun, have experienced recent headwinds, contributing to the company's underwhelming performance. Despite this, Ducommun is well-positioned for future gains, driven by its strong backlog and expanding customer base.

1.c. Company Highlights

2. Ducommun's Q3 2025 Earnings: A Strong Performance

Ducommun Incorporated reported a robust financial performance in the third quarter of 2025, with revenues reaching a new quarterly record of $212.6 million, beating the prior record of $202.3 million set in the previous quarter. The company's gross margins also expanded to 26.6%, a record level, driven by productivity improvements and a favorable business mix. Adjusted EBITDA margins stood at 16.2%, up 30 basis points from the prior year, and adjusted operating income margins were 10.6%, slightly above the prior year's 10.5%. Earnings per share (EPS) came in at $0.99, surpassing analyst estimates of $0.95.

Publication Date: Nov -18

📋 Highlights
  • Record Revenue: Q3 revenue reached $212.6 million, surpassing the previous quarter’s record of $202.3 million.
  • Defense Growth: Defense business grew 13% quarter-over-quarter, driven by 21% missile franchise growth.
  • EBITDA Progress: Adjusted EBITDA hit 16.2% for Q3, up from 13% in 2022, with 30 basis points expansion YoY.
  • Book-to-Bill Ratio: Q3 bookings of $338 million achieved a 1.6x book-to-bill ratio, boosting backlog to $1.03 billion.
  • Litigation Settlement: $150 million one-time payment resolved Guaymas Fire litigation, impacting GAAP but not adjusted earnings.

Segment Performance

The company's defense business was a key driver of growth, with revenues increasing by 13% in the quarter, marking the third consecutive quarter of double-digit growth. The missile franchise was particularly strong, with revenues growing by 21% in the quarter. The Structural Systems segment posted revenue of $89 million, up from $86 million in the prior year, driven by military rotorcraft and ground vehicles. The Electronic Systems segment also reported strong revenue growth, driven by higher revenues in military and space applications.

Bookings and Backlog

Ducommun saw a significant increase in bookings, with new orders totaling $338 million in the third quarter, representing a book-to-bill ratio of 1.6x. This brought the company's remaining performance obligations to $1.03 billion, a new record. The backlog was $1.116 billion, with a significant portion coming from defense bookings. The company expects continued growth in its defense business, driven by its strong presence in missiles and radar.

Outlook and Valuation

Ducommun reaffirmed its guidance for mid-single-digit revenue growth for the full year 2025 and expects low double-digit growth in the fourth quarter. Analysts estimate revenue growth of 8.1% for the next year. With a current P/E Ratio of -38.4 and an EV/EBITDA ratio of -148.08, the company's valuation appears to be influenced by its recent litigation settlement and other one-time items. However, with a P/S Ratio of 1.64 and a Free Cash Flow Yield of 3.37%, the company's shares may be attractive to investors looking for value.

Liquidity and Capital Resources

The company generated $18.1 million in cash flow from operating activities in the third quarter and had available liquidity of $250.7 million as of the end of the quarter. Ducommun is in discussions with its banks to increase the size of its facilities and extend the tenor of its current facility, which will provide more flexibility for M&A activity.

3. NewsRoom

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Ducommun Incorporated named BAE Systems Supplier of the Year for Vertical Launch Systems at Seventh Annual ‘Partner2Win' Supplier Symposium

Dec -04

Source: globenewswire.com

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Financial Analysis: Ducommun (NYSE:DCO) & Karman (NYSE:KRMN)

Dec -04

Source: defenseworld.net

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Ducommun Incorporated (DCO) Presents at Goldman Sachs Industrials and Materials Conference 2025 Transcript

Dec -03

Source: seekingalpha.com

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Ducommun Incorporated Announces Amendment to Credit Facility

Dec -01

Source: globenewswire.com

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Geode Capital Management LLC Has $26.87 Million Stock Holdings in Ducommun Incorporated $DCO

Nov -29

Source: defenseworld.net

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Ducommun (NYSE:DCO) and Karman (NYSE:KRMN) Critical Comparison

Nov -21

Source: defenseworld.net

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Ducommun to Participate in Goldman Sachs Industrials and Materials Conference

Nov -19

Source: globenewswire.com

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Ducommun Incorporated (DCO) Q3 2025 Earnings Call Transcript

Nov -08

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.63%)

6. Segments

Electronic Systems

Expected Growth: 4.5%

Ducommun's Electronic Systems segment growth is driven by increasing demand for advanced electronic systems in the aerospace and defense industries, coupled with the company's strategic acquisitions and investments in research and development. Additionally, the growing need for cybersecurity and communication systems in military and commercial aircraft is also contributing to the segment's 4.5% growth.

Structural Systems

Expected Growth: 4.8%

Ducommun's Structural Systems segment growth is driven by increasing demand for lightweight composite structures in aerospace and defense, coupled with the company's strategic investments in advanced manufacturing technologies and expansion into adjacent markets, such as space and industrial applications.

7. Detailed Products

Structural Systems

Ducommun Incorporated provides structural systems, including aircraft structures, such as fuselage, wings, and control surfaces, as well as satellite structures and launch vehicle components.

Electronic Systems

Ducommun Incorporated offers electronic systems, including electronic assemblies, wiring harnesses, and interconnect systems for aerospace, defense, and industrial applications.

Microelectronic Technologies

Ducommun Incorporated provides microelectronic technologies, including printed circuit boards, semiconductor packaging, and microelectronic assembly services.

Engineering and Design Services

Ducommun Incorporated offers engineering and design services, including design, analysis, and testing of complex systems and components.

Manufacturing and Assembly Services

Ducommun Incorporated provides manufacturing and assembly services, including machining, fabrication, and assembly of complex systems and components.

8. Ducommun Incorporated's Porter Forces

Forces Ranking

Threat Of Substitutes

Ducommun Incorporated faces moderate threat from substitutes due to the availability of alternative materials and technologies in the aerospace and defense industry.

Bargaining Power Of Customers

Ducommun Incorporated has a diverse customer base, which reduces the bargaining power of individual customers, giving the company an upper hand in negotiations.

Bargaining Power Of Suppliers

Ducommun Incorporated relies on a few key suppliers for critical components, giving them some bargaining power, but the company's size and diversification mitigate this risk.

Threat Of New Entrants

The aerospace and defense industry has high barriers to entry, including significant capital requirements and regulatory hurdles, making it difficult for new entrants to compete with Ducommun Incorporated.

Intensity Of Rivalry

The aerospace and defense industry is highly competitive, with several established players competing for market share, driving innovation and pricing pressure on Ducommun Incorporated.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 30.00%
Debt Cost 7.23%
Equity Weight 70.00%
Equity Cost 10.26%
WACC 9.35%
Leverage 42.86%

11. Quality Control: Ducommun Incorporated passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Intevac

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Value: 7.6

Growth: 4.3

Quality: 3.1

Yield: 3.0

Momentum: 6.5

Volatility: 3.7

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Triumph Group

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Ducommun

A-Score: 4.4/10

Value: 2.9

Growth: 3.0

Quality: 4.9

Yield: 0.0

Momentum: 8.5

Volatility: 7.0

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Value: 5.1

Growth: 1.1

Quality: 2.3

Yield: 0.0

Momentum: 9.0

Volatility: 2.0

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Astrotech

A-Score: 3.2/10

Value: 8.0

Growth: 3.3

Quality: 4.4

Yield: 0.0

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Volatility: 3.0

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CPI Aerostructures

A-Score: 3.0/10

Value: 5.2

Growth: 5.2

Quality: 2.4

Yield: 0.0

Momentum: 2.0

Volatility: 3.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

89.44$

Current Price

89.44$

Potential

-0.00%

Expected Cash-Flows