Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. NEW YORK ( TheStreet) -- Ducommun (NYSE: DCO) has been upgraded by TheStreet Ratings from sell to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.
- EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.
- Powered by its strong earnings growth of 106.95% and other important driving factors, this stock has surged by 47.69% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- DUCOMMUN INC reported significant earnings per share improvement 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 year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, DUCOMMUN INC turned its bottom line around by earning $1.55 versus -$4.52 in the prior year. This year, the market expects an improvement in earnings ($1.84 versus $1.55).
- Despite the current debt-to-equity ratio of 1.64, it is still below the industry average, suggesting that this level of debt is acceptable within the Aerospace & Defense industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.36 is sturdy.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to the other companies in the Aerospace & Defense industry and the overall market, DUCOMMUN INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for DUCOMMUN INC is rather low; currently it is at 22.40%. Regardless of DCO's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.77% trails the industry average.
-- Written by a member of TheStreet Ratings Staff