Ducommun Inc.

I, Mike Crawford , certify that this report reflects my personal beliefs about this company and that no portion of my compensation was, is or will be directly or indirectly related to the specific recommendations or views discussed in this report.


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Disclosure Chart

Initiated Coverage on 10/04/2012 with "Buy" Rating and Price Target of $27.00

Ratings Distribution as of August 21, 2017
Rating Number of Companies Percent of Total
Buy 145 74.4%
Neutral 49 25.1%
Sell 1 0.5%
Total 195 100%
% with Investment Banking Relationships
Rating Number of Companies Percent of Total
Buy 23 88.5%
Neutral 3 11.5%
Sell 0 0.0%
Total 26 100%

Explanation of B. Riley & Co. LLC's Rating System

  • Buy: We generally expect “Buy” rated stocks to have an above-average risk-adjusted total return over the next 12 months. We recommend that investors buy the securities at the current valuation.
  • Neutral: We generally believe “Neutral” rated stocks will have an average risk-adjusted total return over the next 12 months.
  • Sell: We generally expect “Sell” rated stocks to have a below-average risk-adjusted total return over the next 12 months. We recommend that investors reduce their positions until the valuation or fundamentals become more compelling.

Risks and Considerations

  • Acquisition/Integration - The Company actively evaluates potential acquisitions as part of its growth strategy. Acquisitions pursued by the Company could be dilutive to financial results and result in a difficult, dilutive or expensive integration.
  • Competition - The industry is highly competitive and many of the Company's competitors have greater resources.
  • Pricing Pressure - The Company's business could be affected by pricing pressure within the market.
  • General Industry - The Company could miss our estimates and/or their financial guidance.
  • Further Potential Risks - See the Company's SEC filings, particularly its 10-K filing, for a discussion of further potential risks.

Additional Risks and Considerations

    • Customer Concentration – The company depends heavily upon a concentrated base of customers, which are subject to unique risks, and a significant reduction in sales to any of its major customers, or the loss of a major customer, could have a material impact on its financial results.
    • Cyclical Business - Both the aerospace and non-aerospace markets in which the company sells its products are cyclical and have experienced periodic declines. Sales are unpredictable and tend to fluctuate based on a number of factors, including economic conditions and developments affecting the industries and the customers served.
    • Government Spending – The company derives a significant portion of its business from contracts related to orders for or associated with the U.S. Government.  In 2011 approximately 52% of Ducommun’s sales were derived from military and space markets. As a result, the success of its business depends upon government spending.
    • Indebtedness – The company’s debt may adversely affect its financial condition, and if sufficient cash flow is not generated to service the debt, the company may need to undertake alternative financing plans.  Furthermore, its covenants impose restrictions that may limit the company’s operating/financial flexibility.
    • Key Personnel – The company’s success depends in part upon its ability to attract and retain key engineering, technical, and managerial personnel (both at the executive and at the plant level).  Ducommun faces competition for engineering, technical, and management personnel from other companies/organizations.