Ducommun Stock: Settlement Masks Strong Earnings Power (Rating Downgrade)
Summary
Ducommun is downgraded from Strong Buy to Buy as shares are now fully valued for 2026, despite strong operational execution.
Q3 sales rose 6% to $212.6M, with defense revenues up 13% but commercial revenues down 10% due to persistent destocking.
DCO targets $950–$1,000M revenues and 18% margins by 2027, with organic growth, engineered products expansion, and cost-saving initiatives driving upside.
Settlement-related cash outflows reduce free cash flow estimates by 27% (2025–2027), requiring extended or refinanced credit facilities.
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Shares of aerospace and defense supplier Ducommun (DCO) surged 23.4% since my last report, sharply outperforming the S&P 500. So, we are seeing the strong buy rating that I have DCO pay off. In this report, I
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This article was written by
Dhierin-Perkash Bechai is an aerospace, defense and airline analyst. Dhierin runs the investing group The Aerospace Forum, whose goal is to discover investment opportunities in the aerospace, defense and airline industry. With a background in aerospace engineering, he provides analysis of a complex industry with significant growth prospects, and offers context to developments as they occur, describing how they might affect investment theses. His investing ideas are driven by data informed analysis. The investing group also provides direct access to data analytics monitors. Learn more.
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