Assessing Ducommun (DCO) Valuation After Strong 12 Month Shareholder Return

Event context and recent performance

Ducommun (DCO) has drawn fresh attention after recent share price gains, with the stock up 1.8% over the past week and 8.2% over the past month, against a year total return of 51.9%.

See our latest analysis for Ducommun.

With the share price at $96.8, Ducommun’s recent 8.2% 1 month share price return sits alongside a much stronger 12 month total shareholder return of 52%, which suggests momentum has been building over a longer horizon.

If Ducommun’s move has you watching aerospace and defense more closely, it could be a good moment to scan aerospace and defense stocks for other ideas in the sector.

With Ducommun trading at $96.8, sitting at a discount to analyst targets and to one estimate of intrinsic value, the key question is straightforward: is there still mispricing here, or is the market already baking in future growth?

Most Popular Narrative: 8.9% Undervalued

With Ducommun last closing at $96.8 and the most followed narrative pointing to a fair value of $106.25, the current pricing gap stands out for investors who focus on future earnings power and margin recovery.

Ongoing mix shift toward higher-margin engineered products and aftermarket (maintained at 23% of revenues, moving toward 25%+), together with value-driven pricing and restructuring actions, is increasing gross margins (recorded at 26.6% in Q2), which supports sustained improvements in net margins and earnings.

Read the complete narrative.

Curious how this mix shift, margin trajectory and earnings outlook relate to that fair value? The key is how growth, profitability and the chosen discount rate work together in this narrative.

Result: Fair Value of $106.25 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, you also need to weigh risks, such as aerospace cycle swings tied to customers such as Boeing, and execution bumps from facility consolidations and production transitions.

Find out about the key risks to this Ducommun narrative.

Build Your Own Ducommun Narrative

If you see the story differently or simply prefer to weigh the numbers yourself, you can build your own view in minutes with Do it your way.

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.

Looking for more investment ideas?

If Ducommun has caught your attention, do not stop here. Broaden your watchlist with a few focused stock sets that match how you like to invest.

• Target potential value opportunities by scanning these 870 undervalued stocks based on cash flows that may trade below what their cash flows suggest.
• Spot income focused opportunities by checking out these 14 dividend stocks with yields > 3% that offer yields above 3%.
• Position yourself early in emerging themes with these 79 cryptocurrency and blockchain stocks tied to cryptocurrency and blockchain trends.

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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