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1. Company Snapshot

1.a. Company Description

Dorman Products, Inc.supplies replacement parts and fasteners for passenger cars, light trucks, and medium- and heavy-duty trucks in the automotive aftermarket industry worldwide.It offers original equipment dealer products, such as intake and exhaust manifolds, window regulators, radiator fan assemblies, tire pressure monitor sensors, exhaust gas recirculation coolers, and complex electronics modules; fluid reservoirs, variable valve timing components, complex electronics, and integrated door lock actuators; and oil drain plugs, and wheel bolts and lug nuts.


The company also provides automotive replacement parts, including door handles, keyless remotes and cases, and door hinge repairs; and heavy duty aftermarket parts for class 4-8 vehicles, such as lighting, cooling, engine management, wheel hardware, air tanks, and cab products.It offers powertrain products comprising cooling products, harmonic balancers, fluid lines and reservoirs, connectors, 4-wheel drive components, other engine, and transmission and axle components; and chassis products, such as control arms, ball joints, tie-rod ends, brake hardware and hydraulics, axle hardware, suspension arms, knuckles, links, bushings, leaf springs, other suspension, steering, and brake components.The company also provides automotive body products, including window lift motors, switches and handles, wiper, and other interior and exterior automotive body components; and hardware products comprising threaded bolts; automotive and home electrical wiring components; and other hardware assortments and merchandise.


It offers its products under the OE Solutions, HELP!, OE FIX, Conduct-Tite, and HD Solutions brands through automotive aftermarket retailers, such as on-line platforms; national, regional, and local warehouse distributors; and specialty markets; salvage yards; local independent parts wholesalers; and mass merchants.The company was founded in 1918 and is headquartered in Colmar, Pennsylvania.

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1.b. Last Insights on DORM

Dorman Products' recent performance was negatively impacted by reduced institutional investor holdings. Citigroup Inc. trimmed its stake by 51.3%, while Hillsdale Investment Management Inc. decreased its position by 59.2%. Despite a "Moderate Buy" rating from six research firms, with a target price of $180.50, the company's Q4 2025 earnings call and financial results revealed challenges. Leadership changes were announced to accelerate growth strategy, but may not have a short-term impact.

1.c. Company Highlights

2. Dorman Products' Q4 2025 Earnings: A Strong Finish to a Robust Year

Dorman Products reported a mixed Q4 2025, with consolidated net sales reaching $538 million, slightly above the year-ago quarter but below internal expectations. However, the company delivered adjusted diluted EPS of $2.17, exceeding the estimated $2.15. Gross margins exceeded expectations, helping to offset the revenue shortfall. For the full year 2025, net sales increased 6% to $2.13 billion, operating income rose 17%, and adjusted diluted EPS grew 24% to $8.87. The company's guidance for 2026 demonstrates confidence in delivering strong top-line growth through innovation and commercialization initiatives.

Publication Date: Mar -02

📋 Highlights
  • Full-Year Net Sales Growth:: Achieved $2.13 billion in 2025, up 6% YoY, driven by light-duty demand and tariff pricing, with operating income rising 17% and margins expanding 170 bps to 17.8%.
  • Earnings Outperformance:: Q4 adjusted diluted EPS hit $2.17, exceeding guidance, despite flat consolidated net sales of $538 million, aided by strong gross margins.
  • Heavy-Duty Segment Strength:: Recorded 6% YoY sales growth in Q4 with 130 bps operating margin expansion, driven by pricing and business wins.
  • Tariff Impact and 2026 Guidance:: Tariffs reduced 2025 EPS by $1.25; 2026 guidance forecasts 7-9% sales growth, $8.10-$8.50 EPS, and 15-16% operating margin, assuming stable tariff levels.
  • Cash Flow Challenges and Recovery:: 2025 operating cash flow dropped 51% YoY to $76 million due to tariff-driven inventory costs, but 2026 expects normalized free cash flow of ~$200 million for M&A and growth investments.

Segment Performance

The light-duty segment reported net sales of $429 million, up slightly year-over-year, driven by pricing initiatives. However, shipment volume was down due to a larger customer adjusting their ordering patterns. The heavy-duty segment saw net sales grow 6% year-over-year, driven by pricing and business wins, with operating margin expanding 130 basis points. The Specialty Vehicle segment's top-line growth was flat year-over-year, with operating margin down due to increased wage and benefit expenses.

Outlook and Guidance

The company guides for 2026 total net sales growth of 7% to 9%, with operating margin of 15% to 16%. Adjusted diluted EPS is expected to be $8.10 to $8.50. The company assumes similar tariff levels in 2026, which had a $1.25 impact on 2025 EPS. The company's strong product funnel, particularly in Complex Electronics, is expected to drive growth. The company is also expanding its footprint, particularly on the West Coast, and driving new product development growth, especially on the nondiscretionary repair side.

Valuation and Cash Flow

With a P/E Ratio of 17.75 and an EV/EBITDA of 11.64, the company's valuation appears reasonable considering its growth prospects. The company's free cash flow yield is 2.1%, and it generated $76 million of free cash flow in 2025. The company expects a more normalized free cash flow year in 2026, similar to 2024 levels of close to $200 million, providing dry powder for M&A opportunities, organic growth investments, and potential share repurchases. Analysts estimate next year's revenue growth at 5.3%, slightly lower than the company's guidance.

Operational Highlights

The company is focused on increasing throughput and reducing development time for Complex Electronics, which continue to be a larger proportion of repair opportunities. Productivity initiatives, including automation investments in DCs and global supply chain optimization, are expected to drive margin expansion. The company's dollar-for-dollar pricing strategy will impact gross margin, but it is confident in its prospects for growth and its ability to deliver outsized growth compared to the market.

3. NewsRoom

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Algert Global LLC Has $22.56 Million Holdings in Dorman Products, Inc. $DORM

Mar -15

Source: defenseworld.net

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Dorman Products, Inc. $DORM Position Trimmed by Citigroup Inc.

Mar -09

Source: defenseworld.net

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Dorman Products, Inc. (DORM) Q4 2025 Earnings Call Transcript

Feb -26

Source: seekingalpha.com

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Dorman Products, Inc. Reports Fourth Quarter and Full Year 2025 Results; Issues 2026 Guidance

Feb -25

Source: globenewswire.com

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Hillsdale Investment Management Inc. Has $2.86 Million Stock Holdings in Dorman Products, Inc. $DORM

Feb -23

Source: defenseworld.net

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Analysts Set Dorman Products, Inc. (NASDAQ:DORM) Target Price at $180.50

Feb -20

Source: defenseworld.net

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2 Auto Replacement Industry Stocks That Can Navigate Cost Headwinds

Feb -11

Source: zacks.com

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Thrivent Financial for Lutherans Sells 4,796 Shares of Dorman Products, Inc. $DORM

Feb -08

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.82%)

6. Segments

Light Duty

Expected Growth: 3.8%

Dorman Products' Light Duty segment growth of 3.8% is driven by increasing demand for automotive repair and maintenance, fueled by an aging vehicle fleet and rising miles driven. Additionally, the company's focus on innovation, expanded product offerings, and strategic partnerships contribute to its growth momentum.

Heavy Duty

Expected Growth: 4.2%

Dorman Products' Heavy Duty segment growth of 4.2% is driven by increasing demand for aftermarket parts, expansion into new markets, and strategic partnerships. Additionally, the company's focus on innovation, quality, and customer satisfaction has led to market share gains. Furthermore, the growing average age of vehicles on the road and the need for replacement parts also contribute to the segment's growth.

Specialty Vehicle

Expected Growth: 3.5%

Dorman Products' Specialty Vehicle segment growth of 3.5% is driven by increasing demand for high-performance and specialty vehicles, rising aftermarket sales, and expanding product offerings in the commercial vehicle market. Additionally, the company's strategic acquisitions and partnerships have enhanced its product portfolio and distribution network, further fueling growth.

7. Detailed Products

Replacement Parts

Dorman Products offers a wide range of replacement parts for vehicles, including brake pads, rotors, and wheel bearings.

OE Solutions

Dorman's OE Solutions provide original equipment quality parts for various vehicle systems, including steering, suspension, and engine components.

Aftermarket Parts

Dorman's aftermarket parts offer a cost-effective alternative to OEM parts, covering a broad range of vehicle systems and components.

Heavy Duty Products

Dorman's heavy-duty products cater to the needs of commercial vehicles, including trucks, buses, and trailers.

Automotive Hardware

Dorman's automotive hardware includes a variety of fasteners, clips, and other components for vehicle repair and maintenance.

Tools and Equipment

Dorman's tools and equipment are designed to simplify vehicle repair and maintenance tasks, including diagnostic tools and testing equipment.

8. Dorman Products, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Dorman Products, Inc. operates in the automotive aftermarket industry, which has a moderate threat of substitutes. While there are some substitutes available, they are not a significant threat to the company's business.

Bargaining Power Of Customers

Dorman Products, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's products are often critical to the operation of vehicles, making it difficult for customers to negotiate prices.

Bargaining Power Of Suppliers

Dorman Products, Inc. relies on a network of suppliers for raw materials and components. While the company has some bargaining power due to its size, suppliers also have some leverage due to the specialized nature of the products.

Threat Of New Entrants

The automotive aftermarket industry has significant barriers to entry, including high capital requirements and regulatory hurdles. This makes it difficult for new entrants to compete with established companies like Dorman Products, Inc.

Intensity Of Rivalry

The automotive aftermarket industry is highly competitive, with many established players competing for market share. Dorman Products, Inc. faces intense competition from companies like AutoZone, O'Reilly Automotive, and Advance Auto Parts.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 33.65%
Debt Cost 8.09%
Equity Weight 66.35%
Equity Cost 8.09%
WACC 8.09%
Leverage 50.72%

11. Quality Control: Dorman Products, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Growth: 7.3

Quality: 7.2

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Momentum: 7.0

Volatility: 7.0

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Dorman Products

A-Score: 5.1/10

Value: 4.5

Growth: 8.0

Quality: 6.5

Yield: 0.0

Momentum: 5.0

Volatility: 6.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

104.36$

Current Price

104.36$

Potential

-0.00%

Expected Cash-Flows