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Is Ducommun (DCO) a Great Value Stock Right Now?

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·3 min read
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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One stock to keep an eye on is Ducommun (DCO). DCO is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock holds a P/E ratio of 17.85, while its industry has an average P/E of 22.48. DCO's Forward P/E has been as high as 25.07 and as low as 6.41, with a median of 16.46, all within the past year.

We should also highlight that DCO has a P/B ratio of 1.36. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.49. Over the past 12 months, DCO's P/B has been as high as 2.25 and as low as 0.66, with a median of 1.64.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DCO has a P/S ratio of 0.66. This compares to its industry's average P/S of 1.04.

Finally, our model also underscores that DCO has a P/CF ratio of 7.19. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. DCO's P/CF compares to its industry's average P/CF of 10.05. DCO's P/CF has been as high as 11.79 and as low as 3.24, with a median of 8.27, all within the past year.

These are only a few of the key metrics included in Ducommun's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, DCO looks like an impressive value stock at the moment.


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