Ducommun (DCO) Tightens Leverage Terms: Smart Balance Sheet Discipline or Added Financial Constraint?

• On November 24, 2025, Ducommun amended its 2022 credit agreement, securing a five-year US$200 million senior secured term loan and a five-year US$450 million revolving credit facility, with part of the proceeds used to refinance existing debt and the remainder earmarked for working capital and general corporate purposes.
• By expanding its borrowing capacity and tying terms to leverage and interest coverage covenants, Ducommun has effectively traded balance sheet flexibility for increased lender oversight and structured deleveraging requirements.
• Next, we’ll examine how this enlarged, variable-rate credit package and tighter leverage covenants may influence Ducommun’s existing investment narrative.

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Ducommun Investment Narrative Recap

To own Ducommun, you have to believe its mix of defense exposure and a recovering commercial aerospace cycle can eventually translate into consistent profitability and stronger cash generation. The enlarged, variable rate debt package appears primarily focused on refinancing and liquidity, so it does not materially alter the near term demand catalysts or the key risks around execution, program timing and customer concentration.

The recent settlement tied to the Guaymas fire, and the associated US$94 million net charge recognized in Q3 2025, is the most relevant backdrop to this new credit amendment. The expanded revolving capacity and structured amortization give Ducommun more room to absorb that hit while still funding working capital and supporting its push into higher margin engineered products, but they also raise the stakes on meeting leverage and interest coverage targets as aerospace and defense programs ramp.

Yet behind the extra liquidity and longer maturities, investors should be aware that...

Read the full narrative on Ducommun (it's free!)

Ducommun's narrative projects $987.5 million revenue and $84.8 million earnings by 2028.

Uncover how Ducommun's forecasts yield a $106.25 fair value, a 13% upside to its current price.

Exploring Other Perspectives

Two members of the Simply Wall St Community value Ducommun between US$106 and US$154 per share, underscoring how far apart individual views can be. You can weigh those opinions against the tighter leverage covenants and interest coverage requirements in the new credit facility, which could influence how much of Ducommun’s aerospace and defense backlog ultimately converts into sustainable earnings and balance sheet strength.

Explore 2 other fair value estimates on Ducommun - why the stock might be worth just $106.25!

Build Your Own Ducommun Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Ducommun research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Ducommun research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Ducommun's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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