Dorman Products Earns Buy Rating on Strong Q1 Performance and Strategic Growth Initiatives

Analyst Gary Prestopino of Barrington maintained a Buy rating on Dorman Products (DORM – Research Report), retaining the price target of $115.00.

Gary Prestopino has given his Buy rating due to a combination of factors reflecting the company’s strong performance and strategic initiatives. Dorman Products showcased resilience in its first quarter of 2024, posting sales that closely matched expectations and significantly exceeding anticipated adjusted earnings per share. The company’s results were buoyed by a remarkable rebound in the Light Duty segment, where operating profits more than doubled compared to the same period last year. Additionally, Dorman Products managed to work off high-cost inventory, which led to an impressive increase in gross profit margin year-over-year.

The firm’s adept handling of inventory and new product introductions has also contributed to the favorable rating. Dorman’s ability to navigate through post-pandemic inventory adjustments, coupled with accelerated point-of-sale growth in the Light Duty segment, signals a robust demand for its offerings. Moreover, their strategy of rolling out new-to-aftermarket products—a staggering 19,000 SKUs over the past three years—underscores Dorman’s commitment to innovation and market leadership. These factors, combined with the company’s initiatives to expand dealer penetration and focus on less discretionary spending categories, position it well for sustained growth, justifying the Buy rating.

Prestopino covers the Consumer Cyclical sector, focusing on stocks such as LKQ, Commercial Vehicle Group, and Dorman Products. According to TipRanks, Prestopino has an average return of 27.3% and a 57.35% success rate on recommended stocks.

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Dorman Products (DORM) Company Description:

Dorman Products, Inc. engages in the supply of automotive replacement parts, fasteners, and service line products for the automotive aftermarket. Its products comprise of power-train, automotive body, chassis, and hardware. The company was founded by Steven L. Berman and Richard N. Berman in October 1978 and is headquartered in Colmar, PA.