We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Strattec vs. Dorman Products: Which Stock is a Better Buy Right Now?
Read MoreHide Full Article
Key Takeaways
STRT has risen 145.1% in a year, outperforming DORM's 37.7%, but fundamentals reveal deeper strengths.
Over 90% of STRT's U.S. sales are tariff-free, while DORM sources up to 40% of goods from China.
STRT has just 5.25% debt-to-capitalization, offering more flexibility than DORM's debt-focused strategy.
Strattec Security (STRT - Free Report) and Dorman Products, Inc. (DORM - Free Report) are U.S.-based auto parts manufacturers whose revenues depend on vehicle production and aftermarket demand, making them key suppliers in the broader automotive ecosystem.
Over the past year, STRT has risen 145.1%, outperforming DORM’s 37.7% growth. However, this outperformance alone doesn't necessarily put Strattec in a stronger position than Dorman Products. To build a solid investment case, it’s important to dive deeper into the underlying business fundamentals and long-term outlook of both companies.
One-Year Price Chart
Image Source: Zacks Investment Research
STRT’s Tariff Resilience & DORM’s China Dependence
One of the most favorable points for Strattec currently is that more than 90% of what it sells in the United States qualifies for tariff-free or reduced-tariff rules. This shields Strattec, a focused automotive technology supplier, from additional expenses that other players might face if there is a rise in tariffs on imports, especially if the U.S. tightens trade rules again. Additionally, this provides the company with a cost advantage and increased stability.
STRT confirmed on its latest earnings call that only 6% of its total sales are expected to be affected by the latest tariffs. This further justifies the firm’s solid business model, which is less susceptible to major financial damage from tariffs.
Dorman Products, however, is significantly exposed to geopolitical and trade risks owing to its continued reliance on Chinese manufacturing. This year, the company is expected to source approximately 30% to 40% of its products from China, thereby leaving it vulnerable to unpredictable tariff shocks and supply chain disruptions. While Dorman has worked to spread out its supply chain since the 2018–2019 tariff issues and has a strategy to combat such challenges, today’s global political and trade situation is more unpredictable. Hence, it is probably harder for the company to manage.
Strattec’s Strong Balance Sheet
Strattec has a strong balance sheet with minimal exposure to debt capital. This is reflected in the total debt to capitalization of 5.25%, considerably lower than 27.8% of the composite stocks belonging to the industry. Thus, the company with significant financial flexibility will be able to invest in organic growth initiatives.
Image Source: Zacks Investment Research
While DORM’s free cash flow remains healthy, a large share of it is being used to pay down debt and return capital to shareholders. With trade-related costs rising, this pattern may reduce near-term flexibility, especially when compared to STRT’s more conservative stance, which offers greater financial flexibility.
STRT or DORM: Which Stock Has an Edge Now?
STRT is trading at a 5.15x trailing 12-month Enterprise Value to Earnings Before Interest, Taxes, Depreciation and Amortization (EV/EBITDA), which is at a discount compared with Dorman Products’ 10.43x.
Image Source: Zacks Investment Research
Thus, Strattec, sporting a Zacks Rank #1 (Strong Buy), is a cheaper stock than DORM, which has a Zacks Rank #2 (Buy). STRT is working on reducing its China exposure, making it a better buy considering the positive developments surrounding the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Strattec vs. Dorman Products: Which Stock is a Better Buy Right Now?
Key Takeaways
Strattec Security (STRT - Free Report) and Dorman Products, Inc. (DORM - Free Report) are U.S.-based auto parts manufacturers whose revenues depend on vehicle production and aftermarket demand, making them key suppliers in the broader automotive ecosystem.
Over the past year, STRT has risen 145.1%, outperforming DORM’s 37.7% growth. However, this outperformance alone doesn't necessarily put Strattec in a stronger position than Dorman Products. To build a solid investment case, it’s important to dive deeper into the underlying business fundamentals and long-term outlook of both companies.
One-Year Price Chart
STRT’s Tariff Resilience & DORM’s China Dependence
One of the most favorable points for Strattec currently is that more than 90% of what it sells in the United States qualifies for tariff-free or reduced-tariff rules. This shields Strattec, a focused automotive technology supplier, from additional expenses that other players might face if there is a rise in tariffs on imports, especially if the U.S. tightens trade rules again. Additionally, this provides the company with a cost advantage and increased stability.
STRT confirmed on its latest earnings call that only 6% of its total sales are expected to be affected by the latest tariffs. This further justifies the firm’s solid business model, which is less susceptible to major financial damage from tariffs.
Dorman Products, however, is significantly exposed to geopolitical and trade risks owing to its continued reliance on Chinese manufacturing. This year, the company is expected to source approximately 30% to 40% of its products from China, thereby leaving it vulnerable to unpredictable tariff shocks and supply chain disruptions. While Dorman has worked to spread out its supply chain since the 2018–2019 tariff issues and has a strategy to combat such challenges, today’s global political and trade situation is more unpredictable. Hence, it is probably harder for the company to manage.
Strattec’s Strong Balance Sheet
Strattec has a strong balance sheet with minimal exposure to debt capital. This is reflected in the total debt to capitalization of 5.25%, considerably lower than 27.8% of the composite stocks belonging to the industry. Thus, the company with significant financial flexibility will be able to invest in organic growth initiatives.
While DORM’s free cash flow remains healthy, a large share of it is being used to pay down debt and return capital to shareholders. With trade-related costs rising, this pattern may reduce near-term flexibility, especially when compared to STRT’s more conservative stance, which offers greater financial flexibility.
STRT or DORM: Which Stock Has an Edge Now?
STRT is trading at a 5.15x trailing 12-month Enterprise Value to Earnings Before Interest, Taxes, Depreciation and Amortization (EV/EBITDA), which is at a discount compared with Dorman Products’ 10.43x.
Thus, Strattec, sporting a Zacks Rank #1 (Strong Buy), is a cheaper stock than DORM, which has a Zacks Rank #2 (Buy). STRT is working on reducing its China exposure, making it a better buy considering the positive developments surrounding the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.