Critical Review: Ducommun (NYSE:DCO) and Spirit Aerosystems Holdings (SPR)

Ducommun (NYSE: DCO) and Spirit Aerosystems Holdings (NYSE:SPR) are both aerospace companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, dividends, valuation, analyst recommendations, institutional ownership, risk and profitabiliy.

Insider and Institutional Ownership

81.0% of Ducommun shares are held by institutional investors. Comparatively, 98.2% of Spirit Aerosystems Holdings shares are held by institutional investors. 8.2% of Ducommun shares are held by insiders. Comparatively, 0.3% of Spirit Aerosystems Holdings shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current recommendations for Ducommun and Spirit Aerosystems Holdings, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ducommun	0	1	3	0	2.75
Spirit Aerosystems Holdings	2	6	8	0	2.38

Ducommun currently has a consensus price target of $36.67, suggesting a potential upside of 23.37%. Spirit Aerosystems Holdings has a consensus price target of $67.54, suggesting a potential downside of 6.20%. Given Ducommun’s stronger consensus rating and higher possible upside, research analysts clearly believe Ducommun is more favorable than Spirit Aerosystems Holdings.

Valuation & Earnings

This table compares Ducommun and Spirit Aerosystems Holdings’ top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Ducommun	$544.79 million	0.61	$52.24 million	$1.21	24.56
Spirit Aerosystems Holdings	$6.81 billion	1.28	$915.60 million	$3.57	20.17

Spirit Aerosystems Holdings has higher revenue and earnings than Ducommun. Spirit Aerosystems Holdings is trading at a lower price-to-earnings ratio than Ducommun, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Ducommun and Spirit Aerosystems Holdings’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ducommun	2.54%	7.62%	3.10%
Spirit Aerosystems Holdings	6.46%	28.51%	10.05%

Dividends

Spirit Aerosystems Holdings pays an annual dividend of $0.40 per share and has a dividend yield of 0.6%. Ducommun does not pay a dividend. Spirit Aerosystems Holdings pays out 11.2% of its earnings in the form of a dividend.

Volatility & Risk

Ducommun has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500. Comparatively, Spirit Aerosystems Holdings has a beta of 1.36, indicating that its share price is 36% more volatile than the S&P 500.

Summary

Spirit Aerosystems Holdings beats Ducommun on 11 of the 16 factors compared between the two stocks.

Ducommun Company Profile

Ducommun Incorporated is a global provider of engineering and manufacturing services for various products and failure applications used primarily in the aerospace, defense, industrial, natural resources, medical and other industries. The Company is a solution-based provider, offering a range of value-added products and services in its primary businesses of electronics, structures and integrated solutions. The Company operates through two segments: Electronic Systems (ES) and Structural Systems (SS). The ES has over three product offerings in electronics manufacturing for various applications, including complex cable assemblies and interconnect systems, printed circuit board assemblies, and electronic, electromechanical and mechanical assemblies. The SS segment offers over three product offerings to support a customer base, including commercial aircraft, military fixed-wing aircraft, and military and commercial rotary-wing aircraft.

Spirit Aerosystems Holdings Company Profile

Spirit AeroSystems Holdings, Inc. is a non-original equipment manufacturer (OEM), aircraft parts designer and manufacturer of commercial aero-structures. The Company is also a supplier of aero-structures. The Company operates through three segments: Fuselage Systems, Propulsion Systems and Wing Systems. The Fuselage Systems segment includes the development, production and marketing of forward, mid and rear fuselage sections and systems. The Propulsion Systems segment includes the development, production and marketing of struts/pylons, nacelles (including thrust reversers) and related engine structural components. The Wing Systems segment includes the development, production and marketing of wings and wing components (including flight control surfaces), and other miscellaneous structural parts. The Company’s maintenance, repair and overhaul (MRO) services include repair stations that provide complete on-site repair and overhaul.