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Dorman Products (DORM - Snapshot Report) is a Zacks #1 Rank (Strong Buy) after posting positive earnings surprises and accelerating earnings momentum.

Company Description

Dorman Products, Inc. supplies automotive replacement parts, fasteners, and service line products primarily for the automotive aftermarket. The company, formerly known as R&B, Inc., was founded in 1978 and is headquartered in Colmar, Pennsylvania.

DORM Exhibits Earnings Momentum

DORM has had back to back positive earnings surprises. The company reported earnings of $0.82 for the September 2011 quarter, $0.06 or 7.9% higher than expectations. The December 2011 quarter saw earnings of $0.87, $0.11 ahead of the Zacks Consensus Estimate for a 14.4% earnings beat.

The year before saw the company beat estimates, but it lacked the increase in momentum that we saw in 2011. A beat of 26% in the September 2010 quarter was followed up by a smaller beat of 22% in December 2010. The beat was smaller on both percentage and absolute terms.

DORM Recently Reported Earnings

On February 21, 2012 the company reported revenue of $139 million roughly $5 million more than the Zacks Consensus Estimate and higher than the $123 million reported in the year ago period. EPS of $0.87 was $0.11 ahead of the Zacks Consensus estimate and higher than the $0.67 reported in the year ago period.

Earnings Estimates Bumped Up

Following the most recent earnings report, analysts bumped up their earnings estimates for 2012. The Zacks Consensus Estimate for 2012 EPS moved from $3.36 in January 2012 to the current level of $3.52.

Valuations

DORM trades at very reasonable valuations. A 15x multiple for trailing twelve months is a little above the 12.7x multiple for the industry average. Looking forward, however, the 13.2x multiple compares more favorably to the 14.8x industry average. Price to book shows a slight premium in valuation of DORM as does price to sales.

The Chart

A quick look at the six month chart shows that DORM is in a nice upward channel. It has tested both highs and lows in the channel and has not broken out of the channel. Momentum investors will appreciate the accelerating earnings momentum, low valuation and solid chart formation for DORM. DORM is a Zacks #1 Rank (Strong Buy).

Dorman Products - ticker DORM>
 
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Brian Bolan is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor service

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