Ducommun Incorporated (NYSE:DCO) shareholders are probably feeling a little disappointed, since its shares fell 2.2% to US$49.13 in the week after its latest yearly results. Ducommun reported US$757m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$1.14 beat expectations, being 9.6% higher than what the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Ducommun after the latest results.
Taking into account the latest results, the current consensus from Ducommun's five analysts is for revenues of US$797.6m in 2024. This would reflect a reasonable 5.4% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to jump 110% to US$2.30. Before this earnings report, the analysts had been forecasting revenues of US$812.6m and earnings per share (EPS) of US$2.36 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
The consensus price target held steady at US$64.80, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Ducommun, with the most bullish analyst valuing it at US$72.00 and the most bearish at US$58.00 per share. This is a very narrow spread of estimates, implying either that Ducommun is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Ducommun's past performance and to peers in the same industry. It's clear from the latest estimates that Ducommun's rate of growth is expected to accelerate meaningfully, with the forecast 5.4% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 2.0% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 6.5% annually. So it's clear that despite the acceleration in growth, Ducommun is expected to grow meaningfully slower than the industry average.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Ducommun. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$64.80, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Ducommun. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Ducommun analysts - going out to 2025, and you can see them free on our platform here.
Before you take the next step you should know about the 3 warning signs for Ducommun that we have uncovered.
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