Dorman Products Is A Buy For Small-Cap Growth Investors 

Monday, April 26, 2021 | Thomas Hughes
Dorman Products Is A Buy For Small-Cap Growth Investors 

Dorman Products Pulls Back After Robust Quarter 

Shares of Dorman Products (NASDAQ: DORM) are pulling back after reporting Q1 results not because results are weak but became the analysts had been expecting a little more. What this means for investors today is a chance to buy into the stock at a lower price and there are a few compelling reasons why. Not only is this stock well-positioned for the aftermarket auto parts industry, an industry that has been booming for several years now, but it is also well-positioned for growth over the long term. With virtually no debt to speak of and ample cash, this company has the flexibility to invest when and where it wants to and it wants to invest in growth. 

Dormann Products Whiffs, Shares Down 3% 

Dorman Products whiffed in relation to the analyst's expectations but you need to take that with a grain of salt. The consensus is based on a mere four analysts, one of whom hasn’t issued a significant note in over a year. That aside, the $288 million in revenue is up 11.7% from last year and drive-by strong demand in all segments. Better yet, the 11.7% is 100% organic growth driven by that demand and expected to hold steady at/near that rate through the end of the fiscal year. On top of that, the 11.7% is on top of a tough comp of +5% in the YOY period. The results may have missed the consensus but there are still good results. 

Kevin Olsen, Dorman Products’ President and Chief Executive Officer, stated, “I am pleased to report a strong start to the fiscal year as we continue to execute on our strategic priorities. Our net sales performance was driven by robust demand, as we saw consistent order strength throughout the quarter. While we saw modest growth with ‘Do-It-For-Me’ focused customers, we saw particular strength with ‘Do-It-Yourself’ focused customers, consistent with trends across the automotive aftermarket.”

Moving down the report the margins are equally impressive. The gross margin is up nearly 400% basis points on a GAAP basis due to cost-leveraging sales gains and internal efficiencies related to ongoing streamlining efforts. SG&A expenses also declined to help boost the operating margin and drive solid double-digit gains in earnings. The GAAP $1.02 is up 46% and the adjusted $1.04 is up 58%, both weak compared to the consensus, but once again good results reflective of a strong market. 

The only downside is that rising costs related to freight, logistics, and wages are cutting into the bottom line and that pressure is not expected to stop. The company didn’t offer any insight into future price increases to offset these costs but we think it’s only a matter of time until they do. Regardless, the company is guiding revenue higher to a range of 9% to 12% which we think too low. Not only is business momentum building but the next three quarters are relatively easy comps and there is also the possibility of expansion or acquisition. 

The Technical Outlook: Dorman Pulls Back From All-Time High 

Shares of Dorman Products are pulling back from the fresh all-time highs and look like they could fall further. The pattern looks like a double-top reversal, the caveat is that this reversal may be from up to sideways and not up to down. If that is the case, we expect to see support buying begin near the $100 level and push price action to the side over the next few weeks or months. The caveat is that price action may fall below the $100 in which case we would still be looking for a range to form, albeit a larger one with a possible bottom near $96. In either case, we are bullish on this stock and waiting for the next buy-signal.

Dorman Products Is A Buy For Small-Cap Growth Investors 

Featured Article: What are earnings reports?


7 Cryptocurrencies That Are Leading The Market Higher

An Influx Of Capital Is Driving Cryptocurrency Higher

There is an influx of money to the cryptocurrency market that is driving the entire complex higher. Not only is institutional interest peaking but recognition and use are on the rise as well. With Bitcoin setting new all-time highs 100% above the 2017 highs the number of new Bitcoin millionaires is on the rise too.

But Bitcoin is not the only cryptocurrency on the market today by far. The number of cryptocurrencies on the market has been growing steadily with more than 4,000 listed on Coinmarketcap alone. But that doesn’t mean they are all worth your time. Many if not most will not stand the test of time.

One way to judge the market’s interest in a cryptocurrency is its market performance gains. A cryptocurrency that is gaining in value is certainly one that you may want to own. The better method of judging the market’s interest in a cryptocurrency is the market cap. The cryptocurrency market is worth upwards of $1 trillion and growing, and most of that value is centered in the top seven. Together, the bottom 3,993 odd cryptocurrencies only account for 12% of the market and have yet to prove any lasting value.

View the "7 Cryptocurrencies That Are Leading The Market Higher".


Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Dorman Products (DORM)1.1$98.72-0.5%N/A27.27N/AN/A
Compare These Stocks  Add These Stocks to My Watchlist 

MarketBeat - Stock Market News and Research Tools logo

MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings, economic reports, financials, insider trades, IPOs, SEC filings or stock splits, MarketBeat has the objective information you need to analyze any stock. Learn more about MarketBeat.

MarketBeat is accredited by the Better Business Bureau

© American Consumer News, LLC dba MarketBeat® 2010-2021. All rights reserved.
326 E 8th St #105, Sioux Falls, SD 57103 | U.S. Based Support Team at [email protected] | (844) 978-6257
MarketBeat does not provide personalized financial advice and does not issue recommendations or offers to buy stock or sell any security.

Our Accessibility Statement | Terms of Service | Do Not Sell My Information

© 2021 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer. Fundamental company data provided by Zacks Investment Research. As a bonus to opt-ing into our email newsletters, you will also get a free subscription to the Liberty Through Wealth e-newsletter. You can opt out at any time.