Dorman Products

Dorman Products, Inc. (DORM - Snapshot Report) is churning out new products at a record pace, leading to strong revenue and earnings growth.

Currently this Zacks #1 Rank (Strong Buy) is at the top of its high-ranking peer group.

Company Description

Dorman Products supplies automotive replacement parts, hardware, brake products and household hardware to the auto aftermarket and mass merchandise markets.

Top Line Up 27%

On Feb 22 Dorman said its fourth-quarter results included a 27% increase in revenue, to $122.5 million, compared to the same period a year ago. Net income swelled 58%, from $7.7 million to $12.2 million.

Earnings per share came in at $0.67, up nicely from last year's $0.43 and 12 cents better than analysts were expecting. Dorman has now topped expectations in each of the past 8 quarters.

Dorman's CEO said the strong revenue and earnings growth for 2010 was due to the "introduction of a record number of new parts during 2010, and continued market penetration of formerly dealer-only products that were introduced in recent years."

Estimates Push Higher

The company did not provide guidance for 2011 in its press release, but the strong results were enough for analysts to raise their expectations.

Forecasts from analysts polled by Zacks now average $2.89, up 15 cents, for 2011. Next year's Zacks Consensus Estimate is up 11 cents, to $3.25. Given the $2.55 per share earned in 2010, the expected growth rates are currently 13 for this year and another 12% in 2012.

Hot Industry, Hotter Company

Currently the auto replacement parts industry is ranked 13th out of 265 on Zacks.com. Dorman edged out the other 7 companies to be the top rated stock in the group.

Looking at some key metrics makes it easy to see why. Dorman's ROE is at 18.9%, well ahead of the 11.8% that its peers are averaging. The company's net profit margin of 10.1% is more than twice the 4.2% similar companies offer.

Dorman has also eliminated its long-term debt over the past 2 years.

The Chart

Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service

Read the full analyst report on DORM