| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 126.50 | 48 |
| Intrinsic value (DCF) | 0.00 | -100 |
| Graham-Dodd Method | 40.30 | -53 |
| Graham Formula | 25.49 | -70 |
Ducommun Incorporated (NYSE: DCO) is a leading provider of engineering and manufacturing solutions for the aerospace, defense, industrial, and medical sectors. Founded in 1849, the company operates through two key segments: Electronic Systems and Structural Systems. The Electronic Systems segment specializes in advanced interconnect solutions, radar enclosures, avionics components, and engineered products like motion control systems, while the Structural Systems segment focuses on precision aero-structure components, bonded assemblies, and critical structural parts for commercial and military aircraft. Serving major aerospace OEMs, defense contractors, and industrial clients, Ducommun plays a vital role in next-generation aviation, space programs, and mission-critical defense applications. With a strong heritage in innovation and a diversified product portfolio, the company is well-positioned in the high-growth aerospace and defense supply chain. Headquartered in Santa Ana, California, Ducommun combines decades of expertise with modern manufacturing capabilities to deliver high-reliability solutions for demanding environments.
Ducommun presents a specialized play in the aerospace and defense supply chain with exposure to both commercial aerospace recovery and sustained defense spending. The company's $1B market cap reflects its niche position as a trusted supplier to major OEMs, with revenue diversification across military fixed-wing, rotary-wing, and space programs. While the 1.3 beta indicates higher volatility versus the market, the zero dividend policy suggests reinvestment in growth opportunities. Key risks include customer concentration (reliance on large aerospace primes), supply chain pressures in the components market, and cyclicality in commercial aerospace orders. The positive net income ($31.5M) and operating cash flow ($34.2M) demonstrate fundamental stability, though capex requirements (-$14.1M) and moderate debt levels ($272M) warrant monitoring. Investors bullish on defense budget expansion and commercial aerospace growth may find DCO's specialized capabilities attractive, particularly in avionics and lightweight structures.
Ducommun occupies a middle-market position in the aerospace components sector, differentiating through deep vertical integration in both electronic systems (interconnects, PCBA) and complex structural assemblies. Its competitive advantage stems from 170+ years of aerospace manufacturing experience, proprietary bonding technologies for lightweight structures, and AS9100-certified production facilities. The company's dual-segment approach allows cross-selling opportunities between electrical and structural solutions—a rarity among smaller peers. However, it faces intense competition from larger diversified aerospace suppliers with greater scale advantages. In electronic systems, Ducommun competes on customization and rapid prototyping rather than pure cost, serving as a tier-2/3 supplier beneath giants like Honeywell or Collins Aerospace. Structurally, its contoured metal forming and composite bonding capabilities are comparable to specialists like Spirit AeroSystems in certain niches. The lack of aftermarket services (a revenue stream for some competitors) and limited international presence (94% U.S. revenue) represent strategic gaps. Defense contracts (∼50% of sales) provide stability but come with longer sales cycles. Technological differentiators include lightning protection systems and microwave components where it holds niche IP. The company's $787M revenue scale makes it vulnerable to pricing pressure from both larger competitors and low-cost entrants in commoditized segments like cable assemblies.