Value
5.0/10data confidence 83%| Component | Sub-score |
|---|---|
| P/S | 8.3 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 3.5 |
| PEG | 10.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 32.5x
- ▸PEG: 0.05
DCO · Why this verdict
Why Ducommun (DCO) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. The TrendMatrix editorial team frequently holds personal long-term positions in securities discussed. We disclose positions held at the time of publication on each piece. We maintain a trading-window policy: we do not initiate or close positions in the same direction as a TrendMatrix publication within 24 hours before or 72 hours after publication.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security. Our sole compensation is subscription revenue.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
VerdictSELL
Overall score4.7/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Ducommun's stock has moved above its price target while carrying a quality deficit, declining revenue, and near-total concentration in a single end market — a combination that makes the current setup unattractive despite a consistent four-quarter earnings beat record.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Despite top-line headwinds, the company has beaten EPS estimates in all four of the most recent quarters, suggesting cost discipline and pricing power have thus far buffered the impact of revenue pressure. Catalyst | Two additional consecutive EPS beats alongside stabilizing revenue would validate that the streak reflects genuine operational resilience rather than cost reductions approaching their limit. | →Stable |
| CounterSustaining an earnings beat streak during revenue decline typically depends on cost reductions that have a finite runway; if revenue does not recover, earnings protection will likely become progressively harder to maintain. | ||
Approximately 96% of revenue comes from the aerospace and defense market, with 58% tied specifically to military and space programs, leaving the business highly exposed to a single end market with no meaningful diversification buffer. Bear case | Concentration risk would begin to diminish only if non-defense or commercial revenue grows to represent a meaningfully larger share of total revenue over a multi-year horizon. | →Stable |
| CounterDeep specialization in aerospace and defense can be a structural advantage — long program lifecycles, sole-source positions, and high switching costs can translate into durable contracted revenue that a concentration metric alone does not fully capture. | ||
Revenue is declining at 11.1% year-over-year while debt-to-equity stands at 3.8x, a combination the data flags as value-trap signals, raising the risk of a debt-service squeeze if the revenue contraction persists. Warnings | Revenue growth must turn positive for at least two consecutive quarters before the value-trap concern can be set aside. | →Stable |
| CounterThe four-quarter earnings beat streak demonstrates management has been able to protect profitability despite the revenue decline, suggesting the top-line drop may reflect program timing or divestitures rather than organic deterioration. | ||
A quality score of 3.5 falls below the minimum investable threshold of 4.0, with no identified competitive moat, leaving the business without the defensive profitability characteristics required to support a position. Warnings | Quality would need to rise above 4.0 for two consecutive assessment periods, driven by improvements in return on assets and margin metrics, before this disqualifier is lifted. | →Stable |
| CounterThe perfect earnings beat streak over four quarters indicates execution is improving at the operational level; if margins expand as revenue stabilizes, quality metrics could cross the floor ahead of current estimates. | ||
Despite top-line headwinds, the company has beaten EPS estimates in all four of the most recent quarters, suggesting cost discipline and pricing power have thus far buffered the impact of revenue pressure.
→StableCatalyst
- Expectation
- Two additional consecutive EPS beats alongside stabilizing revenue would validate that the streak reflects genuine operational resilience rather than cost reductions approaching their limit.
CounterSustaining an earnings beat streak during revenue decline typically depends on cost reductions that have a finite runway; if revenue does not recover, earnings protection will likely become progressively harder to maintain.
Approximately 96% of revenue comes from the aerospace and defense market, with 58% tied specifically to military and space programs, leaving the business highly exposed to a single end market with no meaningful diversification buffer.
→StableBear case
- Expectation
- Concentration risk would begin to diminish only if non-defense or commercial revenue grows to represent a meaningfully larger share of total revenue over a multi-year horizon.
CounterDeep specialization in aerospace and defense can be a structural advantage — long program lifecycles, sole-source positions, and high switching costs can translate into durable contracted revenue that a concentration metric alone does not fully capture.
Revenue is declining at 11.1% year-over-year while debt-to-equity stands at 3.8x, a combination the data flags as value-trap signals, raising the risk of a debt-service squeeze if the revenue contraction persists.
→StableWarnings
- Expectation
- Revenue growth must turn positive for at least two consecutive quarters before the value-trap concern can be set aside.
CounterThe four-quarter earnings beat streak demonstrates management has been able to protect profitability despite the revenue decline, suggesting the top-line drop may reflect program timing or divestitures rather than organic deterioration.
A quality score of 3.5 falls below the minimum investable threshold of 4.0, with no identified competitive moat, leaving the business without the defensive profitability characteristics required to support a position.
→StableWarnings
- Expectation
- Quality would need to rise above 4.0 for two consecutive assessment periods, driven by improvements in return on assets and margin metrics, before this disqualifier is lifted.
CounterThe perfect earnings beat streak over four quarters indicates execution is improving at the operational level; if margins expand as revenue stabilizes, quality metrics could cross the floor ahead of current estimates.
Per-dimension breakdown
Quality
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.0 |
| ROA | 3.0 |
| Gross margin | 1.4 |
| Op margin | 3.0 |
| Net margin | 0.0 |
| Current ratio | 9.3 |
| Moat | 4.4 |
| Piotroski F | 6.7 |
- ▸No competitive moat
Growth
4.6/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 4.6 |
Momentum
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.2 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 3.1 |
- ▸Overbought (RSI 76)
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.0 |
| Analyst rating | 5.0 |
| Price target | 4.9 |
Insider
3.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Modest insider selling — $1,419,866 (0.057% of mkt cap)
Peer rank
2.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.9 |
| quality rank | 1.9 |
| growth rank | 1.3 |
Technical
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.0 |
| support resistance | 1.5 |
| 52w position | 9.6 |
Risk (lower is worse)
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.6 |
| days to cover | 7.6 |
| volatility | 3.0 |
| put call | 10.0 |
| implied vol | 5.9 |
| beta | 6.7 |
| debt equity | 7.9 |
- ▸Concentration risks: 3 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 5.5 |
| news activity | 6.0 |
- ▸Perfect beat streak: 4Q
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- MOMENTUM:7.3>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:41d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-1.1=NEGATIVE
- 8K_CRITICAL:4.02
Warning (0)
none
Reward-to-Risk
-1.14
Upside
-13.7%
Downside
12.0%
Sizing output
AVOID
SetupUNKNOWN — No clear chart pattern; technical signals are mixed
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — MCap $2.5B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Momentum at 7.3 could not lift the engine output above the verdict floor. Failed gate signal: ASYMMETRY:-1.1=NEGATIVE.
The strongest dimensions are Momentum at 7.3, Risk (lower is worse) at 7.0, and Catalyst at 6.3; the weakest are Peer rank at 2.5, Quality at 3.5, and Insider at 3.9. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of -1.14 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Approximately 96% of revenue comes from the aerospace and defense market, with 58% tied specifically to military and space programs, leaving the business highly exposed to a single end market with no meaningful diversification buffer.
Trip ifAerospace and defense revenue concentration falls below 80% of total revenue, signaling material customer diversification progress from the current 96%.
- P2Revenue is declining at 11.1% year-over-year while debt-to-equity stands at 3.8x, a combination the data flags as value-trap signals, raising the risk of a debt-service squeeze if the revenue contraction persists.
Trip ifRevenue growth turns positive (above 0% YoY) for 2 consecutive quarters, exiting the current -11.1% decline.
- P3A quality score of 3.5 falls below the minimum investable threshold of 4.0, with no identified competitive moat, leaving the business without the defensive profitability characteristics required to support a position.
Trip ifQuality score rises above 4.0 for 2 consecutive quarterly assessments.
- P4Despite top-line headwinds, the company has beaten EPS estimates in all four of the most recent quarters, suggesting cost discipline and pricing power have thus far buffered the impact of revenue pressure.
Trip ifEPS surprise falls below 0% for 2 consecutive quarters, breaking the 4-quarter beat streak.