DCO

Rating neutralAI Memo

Ducommun

As of 2026-05-03/Confidence medium

Open ticker Back to Memos

Data freshness

AI Memo

As of 2026-05-03 • Model: RankAlpha Sentiment Codex

Decision Panel

Action, confidence, horizon, and decision blockers at a glance.

Action

neutral

Confidence

medium

Horizon

—

Key catalyst

Restatement resolution and shifted Q1 reporting date • 2026-05-12

Expected move: -12%

Biggest risk

The bearish read is that credibility around reported earnings power has been damaged at exactly the point investors need clean Q1 numbers; the incremental Q1 stock-comp expense, non-reliance language, and possible estimate resets can compress the multiple even without a cash-flow hit.

Invalidation

Break below $118 or thesis failure.

What would change my mind?

The best constructive read is that the May 1 issue is an accounting-timing reset rather than an operating collapse: management said revenue, gross margin, and cash flow were not affected historically, and a clean 10-K/A by May 8 followed by an on-time May 12 Q1 release could stabilize confidence quickly.

Research note

Recommendation

neutral

Confidence

medium

As of

2026-05-03

Base target

$132

p=1%

Bull target

$150

p=0%

Bear target

$118

p=0%

Key bullets

Fast scan of bull, bear, and watch items

BullKey bullets

Q1 EPS optics face a stock-comp headwind even if cash economics are intact
Aerospace and defense exposure still supports the demand base if credibility is restored
The best constructive read is that the May 1 issue is an accounting-timing reset rather than an operating collapse: management said revenue, gross margin, and cash flow were not affected historically, and a clean 10-K/A by May 8 followed by an on-time May 12 Q1 release could stabilize confidence quickly.

BearKey bullets

High dependence on aerospace and defense demand leaves the story exposed to program timing, commercial build-rate variability, and defense-budget swings.
Higher-than-expected Q1 2026 stock-based compensation expense of about $5.0 million to $6.0 million versus prior expectations could distort near-term EPS optics.
Non-reliance and restatement risk across 2024-2025 reported financials, with possible further changes before the amended filing is complete.

WatchKey bullets

Restatement resolution and shifted Q1 reporting date

Summary

High-level snapshot

Recommendation

neutral

Model confidence

medium

Timeframe

Asset

Equity

Trigger

Base case: $132 (p=1%)

Bull/Bear spread: -0% / -21%

Vs latest close: Bull -0% · Base -12% · Bear -21%

Scenario probabilities

Bull Target: $150 (p=0%)Base Target: $132 (p=1%)Bear Target: $118 (p=0%)

Commentary

As of May 3, 2026, this looks more like an early or mistimed post-earnings follow-up than a true T+3 earnings read: Ducommun's company press release on April 28, 2026 said Q1 2026 results are scheduled for May 12, 2026, while the May 1, 2026 8-K introduced a negative accounting overhang before the quarter was reported. Immediate sentiment is therefore skewed by the restatement headline rather than by confirmed Q1 operating results, and I did not find a trustworthy post-print analyst revision set to upgrade conviction.

As of 2026-05-03 • Updated bi-weekly / post-earningsSource: Internal modelMethodology

Analyst Summary

Thesis highlights from the latest analysis

Bull Case

Bear Case

Drivers

Scannable catalysts and supporting factors

Q1 EPS optics face a stock-comp headwind even if cash economics are intact
Aerospace and defense exposure still supports the demand base if credibility is restored

Scenarios

Bull Target (Scenario probability)

$150 / p=0% prob

Base Target (Scenario probability)

$132 / p=1% prob

Bear Target (Scenario probability)

$118 / p=0% prob

Price $150 as of 2026-06-02

Nearest Scenario: Bull (∆ 0%)

Targets vs latest close: Bull -0% · Base -12% · Bear -21%

Sentiment & Exposure

News Sentiment (30d)

-0.35

Social Sentiment (7d)

0.00

Events

Other notable items detected

EVENT2026-05-12
Restatement resolution and shifted Q1 reporting date
The highest-priority catalyst is not a normal post-earnings readout: on May 1, 2026 Ducommun said prior 2024-2025 financials should no longer be relied upon because of stock-comp timing errors, expects the restatement work to finish on or before May 8, 2026, and still expects to release Q1 2026 results on May 12, 2026. That means the queue date of April 30, 2026 appears stale, and the next real thesis test is whether the amended filing and Q1 release arrive cleanly and without wider revisions. [#8-K-2026-05-01] [#PR-2026-04-28]
Prob 85.00% • Move 9.00% • Priced-in 70.00%

Short-term Catalysts

Next few weeks

Q1 EPS optics face a stock-comp headwind even if cash economics are intact
2026-05-12
Management said the error was non-cash and did not affect historical net revenue, gross margin, or operating cash flow, but also said Q1 2026 will carry roughly $5.0 million to $6.0 million of higher stock-based compensation versus prior expectations. That setup can pressure near-term EPS framing and analyst revisions even if underlying operations are steadier than headline optics imply. [#8-K-2026-05-01]
Prob 80% • Move -6% • Priced-in 60%

Long-term Catalysts

Months to a year

Aerospace and defense exposure still supports the demand base if credibility is restored
2026-09-30
Ducommun's FY2025 mix remained heavily tied to aerospace and defense, which represented 96% of revenue, with commercial aerospace alone at 38%, so the longer-term demand backdrop can still support orders if the company gets through the accounting reset without operational spillover. This is supportive, but it is a secondary thesis until reporting credibility is re-established. [#10-K-2026-02-26]
Prob 60% • Move 8% • Priced-in 55%

Risks

High dependence on aerospace and defense demand leaves the story exposed to program timing, commercial build-rate variability, and defense-budget swings.
Higher-than-expected Q1 2026 stock-based compensation expense of about $5.0 million to $6.0 million versus prior expectations could distort near-term EPS optics.
Non-reliance and restatement risk across 2024-2025 reported financials, with possible further changes before the amended filing is complete.
Potential clawback recoupment of roughly $4.3 million to $4.9 million adds governance and management-credibility overhang.

Peers

Symbol	Summary
PH	Parker-Hannifin is a much larger diversified motion/control manufacturer, so it is only a loose execution and margin reference rather than a direct aerospace structures/electronics comp.
ETN	Eaton is also a broad capital-goods benchmark, useful for industrial quality and valuation context but not a close operating peer to Ducommun's aerospace/defense mix.

Sources

Internal and external references used in this analysis

Model source: RankAlpha Sentiment Codex
Analysis date: 2026-05-03

AI Stock Memo: DCO - Ducommun - RankAlpha