DCO - Ducommun: Management Expects Margin Expansion And Revenue Growth

2024-04-21 02:36:43 ET

Summary

• Although Ducommun's commercial aerospace business faced substantial headwinds given the beginning of the pandemic, demand from the market has continued to recover in recent years.
• On April 16, 2024, Ducommun's board rejected an unsolicited, non-binding indication of interest from Albion River LLC offering $60 in cash per share.
• Ducommun's board feels the offer doesn't fully reflect the company's Vision 2027 plan where the company sees meaningful adjusted EBITDA margin expansion and continued revenue growth.
• I rate Ducommun a 'Buy' and I would own it in a diversified portfolio given the company's growth potential and relatively attractive valuation with forward EV/EBITDA ratio of 9.18.

Ducommun Incorporated ( DCO ) is a company that provides manufacturing solutions for customers in the aerospace, defense, and industrial markets.

In terms of business segments, Ducommun has two core businesses , an electronic systems business that accounted for 57% of revenue in 2023 and a structural systems business that accounted for 43% of sales in the same year....

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