Story Stocks®
Updated: 20-Apr-20 13:31 ET
Ducommun guides higher despite not a lot of aerospace suppliers doing well these days
- Ducommun (DCO +4%) caught our attention today as there are not a lot of aerospace suppliers guiding higher these days.
- And it was pretty sizeable upside as DCO expects Q1 revs in excess of $170 mln vs. $156.7 mln consensus. It also expects to report gross margin above 20%, right in-line with Q4's 21.5%. That tells us that DCO is not simply generating sales by cutting prices, which is good news for its EPS result.
- DCO does not provide a lot of details. We will have to wait until it reports full Q1 results on April 30.
- However, something that is probably helping DCO is the fact that it made the strategic decision to differentiate itself from competitors in recent years by providing more complex assemblies as a higher value added supplier. This is likely helping DCO ward off competitors as most suppliers are unable to make the same components. We also suspect that DCO's defense business is helping to mitigate industry weakness on the commercial side.
- The stock jumped in mid-February on a surprisingly strong Q4 report with a huge $0.16 beat and it's following that up with what appears to be another solid result in Q1. Also, in 2019, sales reached $721 mln, DCO's highest since 2014 as Ducommun has been showing good momentum of late.
