Ducommun Getting An Uncommon Lift Thanks to Dassault

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It’s been a good month for California’s oldest company.


Shares of aerospace parts manufacturer Ducommun Inc., which opened its doors in 1849 selling picks and shovels to gold prospectors, surged more than 19 percent in October, taking the company to a new 52-week high nearly a year to the day after it hit a 52-week low.


The Carson company got a boost when it reported a 42-percent hike in third quarter profits, thanks to strong commercial sales. Also boosting investor confidence was a $25 million contract Ducommun announced a week before it reported its earnings.


Ducommun will build winglets vertical tips on the aircraft’s wings that help reduce drag for French aircraft manufacturer Dassault Syst & #269;mes. The work for the Falcon 2000 jet will be done at Ducommun’s Monrovia facility, with the contract extending to 2010.


Shares in the company rose more than 6 percent Oct. 29, the day the company reported the earnings. They closed at $39.73 on Oct. 31.


“It’s a well-run company in a booming industry,” said analyst Alex Hamilton of Jesup & Lamont Securities Corp. “Rising water lifts all ships.”


Still, Ducommun’s growth has outpaced the industry this year, and investors have taken notice. Year to date profits are up 25 percent on a nearly 8 percent growth in revenue, helping the company to clear its balance sheet.


“The company has really paid down its debt and the growth has been organic,” Hamilton said.


Analysts also have cheered the company’s efforts to reduce its dependence on government defense contracts, such as its deal with Dassault.


Another example is a $28-million contract the company landed with Embraer S.A. back in September. The company will be making fuselages and door skins at a new Mexican manufacturing plant for the Brazilian executive jet maker.


“These deals are the types of deals we’re gong to continue to pursue as part of our strategy” said Chief Executive Joseph Berenato.


In its earnings report, Ducommun said commercial sales rose to about 38 percent of its total business up from 31 percent from the same period a year earlier while sales to the military fell to about 60 percent from 66 percent.


“The company still has half of its revenue tied up in only five big government contracts,” Hamilton said. “But investors showed they were happy to see Ducommun diversify by landing more commercial deals.”

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