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Why Dorman Products (DORM) Is Up Today

Stocks in this article: DORM

NEW YORK (TheStreet) -- Dorman Products (DORM) was gaining 10% to $57.03 Wednesday after reporting fourth-quarter results that surpassed analyst estimates.

The auto parts maker posted earnings of 56 cents a share, beating analyst estimates of 54 cents a share by 2 cents. Revenue grew 25.8% from the year-ago quarter to $169.8 million. Analysts estimated revenue of $163.4 million for the quarter.

Gross profit margin for the fourth quarter was 38.9%, compared to 38.4% in the year-ago period. The increase was mostly due to a favorable change in the company's sales mix toward new, higher margin products.

Must read: New Lifetime High Reached By Dorman Products (DORM)

TheStreet Ratings team rates DORMAN PRODUCTS INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate DORMAN PRODUCTS INC (DORM) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, growth in earnings per share, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • DORM's revenue growth has slightly outpaced the industry average of 12.9%. Since the same quarter one year prior, revenues rose by 13.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • DORM has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 2.92, which clearly demonstrates the ability to cover short-term cash needs.
  • DORMAN PRODUCTS INC has improved earnings per share by 14.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, DORMAN PRODUCTS INC increased its bottom line by earning $1.82 versus $1.54 in the prior year. This year, the market expects an improvement in earnings ($2.21 versus $1.82).
  • 40.68% is the gross profit margin for DORMAN PRODUCTS INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 12.86% is above that of the industry average.
  • Net operating cash flow has significantly increased by 199.24% to $15.53 million when compared to the same quarter last year. In addition, DORMAN PRODUCTS INC has also vastly surpassed the industry average cash flow growth rate of -32.39%.
  • You can view the full analysis from the report here: DORM Ratings Report

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