Dorman Products, Inc. (DORM): what the price assumes

In the published model solve dated 2026-Q2, anchored at $129.35, Dorman Products, Inc. (DORM) is priced for +6.7% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/DORM

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 8.9% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.2%); the inversion above states its own rate.

Per-Model Detail (n=11)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• Dorman is a product-development shop wearing a parts-supplier badge, and the annual report keeps score: In 2025, we introduced 5,560 new distinct parts to our customers and end-users, including 1,608 "New-to-the-Aftermarket" parts.
• Two customers bought roughly 40% of everything the company sold in 2025, so the annual pricing conversation happens across a very short table.
• Tariff refunds are the near-term swing: the first-quarter filing reports that the Supreme Court ruled against certain duties in February 2026 and that Dorman, as importer of record on affected products, intends to pursue refunds with no assurance of receiving them.

Bull Case

Run a screen over Dorman and the machine files it with the auto-parts suppliers, then prices it accordingly. The screen is looking at the wrong thing. On roughly $2.15 billion of trailing revenue the company converted 15.4% into operating profit. LKQ, working the same aftermarket, ran a 6.8% operating margin; BWA managed 4.4%; PHIN 7.3%; over in specialty vehicles PATK ran 7.0% and LCII 7.1%. Dorman earns about twice what the cohort earns, and it is not because it is bigger. Every one of those companies is larger by revenue.

The difference is what the company actually sells. Dorman's engineers go looking for original-equipment parts that fail in the field, redesign them so they fail less, and get a replacement to market ahead of everyone else. The 10-K counts the output directly: In 2025, we introduced 5,560 new distinct parts to our customers and end-users, including 1,608 "New-to-the-Aftermarket" parts. A part nobody else stocks carries the margin of an invention. A part everybody stocks carries the margin of a commodity. The whole company is a bet on staying in the first category, and 1,608 new-to-the-aftermarket introductions in a single year is the machine running.

The Light Duty business, which is close to four-fifths of revenue, shows what that does to profitability. Segment income from operations rose to 20.5% of net sales in 2025 from 18.2% the year before, which the filing attributes to tariff-related pricing actions, stronger customer demand in the first half, and demand for new products. A supplier that can push a tariff through to the shelf and come out with a wider margin is not a price taker.

Reach is the other half of it. The 10-K reports that As of December 31, 2025, we serviced approximately 9,000 active accounts. That is the distribution the new-part engine plugs into, and it is why a redesigned wheel bearing can be on a shelf nationally within one selling season.

The balance sheet is built for this and nothing more. Borrowings net of liquid assets sit near 398 million dollars, roughly 1.2 times operating profit, with trailing operating income covering the interest bill close to twelve times over. The credit agreement, a $600.0 million revolving facility and a $500.0 million term loan, runs to October 4, 2027, and the first-quarter filing notes that interest expense fell on lower outstanding principal after repayments across recent quarters. The share count has come down about 0.9% a year for four years. Cash is going into parts and into the register, not into leverage.

Set that against what the price actually demands. Today's level asks the company to grow operating profit roughly 2.9% a year over five years. That is materially less than the pace the recent record contains. The bull case does not need the invention machine to accelerate. It needs it to keep idling.

Bear Case

The advantage here is a head start, not a patent. Dorman gets to a broken original-equipment part first, and for a while it owns that part number. Nothing stops the second entrant except the time it takes to tool up, and the filing is unusually frank about who the second entrant might be: We also face competition from OEMs, through their dealer networks, and from some of our customers whose private-label brands compete with ours. Read that alongside the concentration disclosure and the shape of the risk sharpens. The two customers who together took roughly 40% of 2025 net sales are also running the private-label programs that sell against the branded product. They see the part, they see the volume, and they see the margin.

The price assumes that arrangement holds. Every method that values the company on what it already owns or already earns lands below where the stock trades: book value plus profitability, the capitalized-earnings lenses, and the comparable-company multiples all sit under the price. Only the forward cash-flow lens reaches it. That is the signature of a durability premium, and durability is exactly the thing a head start cannot guarantee. If the head start shortens, nothing in the static methods catches the stock on the way down, because they are already below it.

The first quarter of 2026 gave a preview of how quickly the earnings line can move even when the top line does not. Net sales rose to $528.8 million from $507.7 million a year earlier, and diluted earnings per share fell to $1.43 from $1.87. More product went out the door and less profit came back, which is what absorbing import duty looks like before the pricing catches up.

Underneath the headline, two of the three businesses are thin. Heavy Duty net sales grew $6.1 million, or 11.9%, in the quarter on tariff-related pricing, and the segment still earned 0.8% of net sales, which counted as an improvement of 110 basis points. Specialty Vehicle segment income slipped to 13.1% of net sales in 2025 from 15.2% in 2024 on fixed-cost deleverage and higher duty costs. Roughly a fifth of the company is running at margins that a soft year would erase, and Light Duty is carrying the consolidated number more or less alone.

Cash conversion deserves a second look too. The 10-K describes operating cash flow being consumed by inventory built to meet demand and to pay increased tariffs on imports, offset in part by higher proceeds from selling accounts receivable under customer-sponsored programs. Those programs belong to the same concentrated customers. A supplier that funds part of its working capital through facilities its largest buyers sponsor has one more thread running back to the same two counterparties.

None of this makes the balance sheet fragile. Borrowings are modest and interest is covered many times over. But the borrowings float, at a weighted average 5.09% on the credit facility as of March 28, 2026, and the agreement matures on October 4, 2027, which puts a refinancing inside the window the price is asking the business to compound through.

Valuation

Start with the demand the price makes, because it is a small one. The market is capitalizing the company at roughly fourteen times the operating profit of the last twelve months, and inverting that gives an assumption of about 2.9% annual operating-profit growth sustained over five years. Measured against what this business has recently delivered, that is a modest ask. The pace is not the stretch here. The duration is.

Where it gets interesting is that the methods do not agree about whether even a modest ask is already paid for. The forward cash-flow lens reaches the price. Nothing else does. Book value plus profitability lands below it, the capitalized-earnings lenses land well below it, and the comparable-company multiples land below it too. The reason is basis rather than disagreement about the facts: the earnings-power read takes a five-year average of operating income, about $0.23 billion, and capitalizes it with no growth at all, so it prices the company as if the last five years were the future. The forward read credits the recent run rate instead. The gap between those two numbers is the entire argument about Dorman, and it is a question about persistence rather than about arithmetic.

One caveat sits under all of it. The implied growth figure is unusually sensitive to the discount rate used: each additional percentage point of cost of capital moves the implied operating-profit growth requirement by about 5.9 percentage points. That is a wide swing for a small input, and it means the "2.9%" should be read as a neighborhood rather than a measurement.

The cohort comparison cuts a particular way. Dorman turned 15.4% of trailing revenue into operating profit. In the light-duty cohort LKQ managed 6.8% and BWA 4.4%; GNTX, the one genuine margin peer, ran 18.4%. Among specialty-vehicle names PATK earned 7.0% and LCII 7.1%. Yet the multiple the market pays sits in the lower half of that peer group's range. A below-average valuation on an above-average margin is either an opportunity or a verdict that the margin is borrowed from tariff pricing the filings say drove much of last year's Light Duty gain. Nothing in the trailing record decides between those two readings.

The balance sheet does not press on the answer. Borrowings net of liquid assets stand near 398 million dollars, about 1.2 times operating profit, with interest covered close to twelve times by trailing operating income. The company is not consuming cash, and the share count has fallen about 0.9% a year across four years. What that buys is time, which is precisely the input the durability question needs.

Catalysts

The tariff refund is the live variable and it is not in anyone's model yet. The first-quarter filing sets out the sequence: in February 2026 the Supreme Court ruled against certain duties previously imposed under the International Emergency Economic Powers Act, the ruling did not address refunds of duties already paid, and in March 2026 the Court of International Trade ordered U.S. Customs and Border Protection to begin the refund process for all importers subject to those duties. Dorman is the importer of record for products that carried those duties and says it intends to pursue refunds, while noting the trade court's order may face a government challenge and that there is no assurance of receiving all or any portion of the money. The company spent a year pushing duty costs into prices. If a slice of that cost comes back, it comes back against prices that have already moved.

The March quarter itself showed the cost side still winning. Net sales reached $528.8 million against $507.7 million in the comparable quarter, with U.S. customers accounting for $489.1 million of the total, while diluted earnings per share came in at $1.43 versus $1.87. The effective tax rate for the quarter was 22.5%. Heavy Duty was the growth story, up 11.9% on tariff-related pricing actions, though from a segment margin of 0.8% that says more about pricing than about demand.

Debt is the quieter clock. The weighted average interest rate on credit facility borrowings was 5.09% as of March 28, 2026 against 5.07% at the December year end, and interest expense fell year over year on lower outstanding principal after repayments across several quarters. The facility matures in October 2027, so the pace of repayment between now and then determines whether that maturity is an event or a formality.

Peer Cohorts (Per Segment, With Filing Citations)

Light Duty (reported)

• GPC (GENUINE PARTS CO)
• FY2025 10-K: …the collectability of trade accounts receivable based on a combination of factors. We estimate an allowance for doubtful accounts as a percentage of net sales based on various factors, including historical experience, current economic conditions and future expected credit losses and collectability trends. We will…
• FY2025 10-K: …(in thousands) Balance Sheet Line Item December 31, 2025 December 31, 2024 Operating lease assets Operating lease assets $ 2,084,487 $ 1,769,720 Operating lease liabilities: Current operating lease liabilities Other current liabilities $ 394,536 $ 343,276 Noncurrent operating lease liabilities Operating lease…
• LKQ (LKQ CORPORATION)
• FY2025 10-K: …furnace and sold to consumers of aluminum ingots and sows for use in the production of various automotive products. We also sell the precious metals recovered from certain recycled parts, such as catalytic converters. Distribution We believe our North America segment operates the largest distribution network of…
• FY2025 10-K: …credit facilities and term loans payable of $1,011 million and $1,651 million at December 31, 2025 and 2024, respectively. Of these amounts, there were no current maturities at December 31, 2025 or 2024. See Note 18, "Long-Term Obligations" to the Consolidated Financial Statements in Part II, Item 8 of this Annual…
• GNTX (GENTEX CORPORATION)
• FY2025 10-K: …current light vehicle production forecasts, the Company's resultant forecast for sales of its automatic-dimming mirrors and electronics, and the Company's estimates for its other products, including premium audio, aerospace, medical, fire protection, and consumer electronic products, the Company anticipates that 2026…
• FY2025 10-K: …and commercial fire protection industry and signaling devices for the commercial fire protection industry. The Company's largest business segment involves designing, developing, manufacturing and marketing interior and exterior automatic-dimming automotive rearview mirrors that utilize proprietary electrochromic…
• PHIN (PHINIA INC.)
• FY2025 10-K: Item 8 of this Form 10-K for additional financial information about geographic areas. Product Lines and Customers During the year ended December 31, 2025, approximately 35% of the Company's net sales were for Service (OES and IAM), approximately 25% were for light passenger vehicle applications, approximately 19% were…
• FY2025 10-K: …Methodology Key Assumptions Customer relationships $ 18 12 years Multi-period excess earnings Discount rate, customer attrition rate Patented and unpatented technology 9 6 years Relief-from-royalty Royalty rate, discount rate, obsolescence factor The purchase price, net of cash acquired, was allocated based on the…
• GTX (Garrett Motion Inc.)
• FY2025 10-K: …side, we continue investing to support our customers, especially for hybrids, while also expanding our portfolio with the development of larger turbochargers, including the new Garrett MEG product line, aimed at marine and industrial applications, including backup power generation for data centers. Key trends…
• FY2025 10-K: Garrett over time and require significant and sustained research, development and engineering ("RD&E") investments. They bring significant benefits in terms of energy efficiency (thereby reducing total cost of ownership), lower weight and compact packaging that are highly valued by our customers. Our Industry Overview…
• BWA (BORGWARNER INC)
• FY2025 10-K: …EV charging stations, may affect consumer preferences. Economic declines or impacts of tariffs that result in a material reduction in automotive or truck production would have an adverse effect on the Company's sales. The weighted average market production, as estimated by the Company for the year ended December 31,…
• FY2025 10-K: , emissions and performance. PowerDrive Systems PowerDrive Systems' products and technologies provide industry-leading performance and efficiency with quick-to-market solutions powering current and next-generation electric and hybrid vehicles. PowerDrive Systems' technologies include power electronics such as…

Heavy Duty (reported)

• GPC (GENUINE PARTS CO)
• FY2025 10-K: …and other vehicles. Our Industrial segment distributes a wide variety of industrial bearings, mechanical and fluid power transmission equipment, hydraulic and pneumatic products, material handling components and other related parts and supplies. We believe this expanded segmentation will provide our investors with…
• FY2025 10-K: …37% of total GPC net sales, operates across North America and Australasia through our wholly-owned subsidiaries Motion Industries, Inc. ("Motion"), headquartered in Birmingham, Alabama, and Motion Asia Pacific, headquartered in Sydney, Australia. We provide replacement parts and value-added solutions to maintenance,…
• LKQ (LKQ CORPORATION)
• FY2025 10-K: …furnace and sold to consumers of aluminum ingots and sows for use in the production of various automotive products. We also sell the precious metals recovered from certain recycled parts, such as catalytic converters. Distribution We believe our North America segment operates the largest distribution network of…
• FY2025 10-K: …including a potential sale of the Company. 4 BUSINESS TRANSFORMATION As part of executing our strategy to deliver profitable growth, drive a lean operating model and maximize returns on invested capital, we will, from time to time, engage in restructuring and business transformation initiatives. These initiatives can…
• MOD (MODINE MANUFACTURING CO)
• FY2025 10-K: …growth in the global construction markets. We believe large-scale infrastructure development projects, including those for data centers and artificial intelligence, will benefit the construction markets. We expect these large-scale development projects will increase the need for construction equipment including…
• FY2025 10-K: SalesMember 2024-04-01 2025-03-31 0000067347 us-gaap:ForeignExchangeContractMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:CostOfSalesMember 2024-04-01 2025-03-31 0000067347 us-gaap:CommodityContractMember us-gaap:DesignatedAsHedgingInstrumentMember us-gaap:CostOfSalesMember 2024-04-01 2025-03-31…
• PHIN (PHINIA INC.)
• FY2025 10-K: …to our customers. We rely on sales to OEMs around the world of varying credit quality and manufacturing demands. Supply to several of these customers requires significant investment by us. We base our growth projections, in part, on commitments made by our customers. These commitments by OEMs generally renew yearly…
• FY2025 10-K: D. Ericson (54) President and Chief Executive Officer (July 2023) • President and General Manager, Fuel Systems and Aftermarket BorgWarner (2022-July 2023) • President and General Manager, Morse Systems, BorgWarner (2019-2022) Chris P. Gropp (61) Senior Vice President and Chief Financial Officer (January 2026) • Vice…

Specialty Vehicle (reported)

• PATK (PATRICK INDUSTRIES, INC.)
• FY2025 10-K: …sell Forestry Stewardship Council ("FSC") materials to its customers at certain of its manufacturing branches. The FSC certification provides a link between responsible production and consumption of materials from the world's forests and assists the Company's customers in making socially and environmentally…
• FY2025 10-K: 0 square foot facility includes a showroom that displays the Company's marine products as well as the marine design and engineering capabilities and services offered by our marine businesses. Operating Brands Through its operating brands, the Company provides customers with specific product knowledge, expertise and…
• LCII (LCI INDUSTRIES)
• FY2025 10-K: …these markets. Major customers include Brunswick Corporation (symbol: BC), Polaris Inc. (symbol: PII), Blue Bird Corporation (symbol: BLBD), Skyline Champion Corporation (symbol: SKY), and Cavco Industries, Inc. (symbol: CVCO). We serve our adjacent industries customers by delivering high-quality components such as…
• FY2025 10-K: …industries, including transportation, marine, and housing. These adjacent industries offer significant growth opportunities, including by helping us leverage our established relationships with OEMs that often operate in multiple sectors. While the potential content per unit we may supply to adjacent industries varies…
• THO (THOR INDUSTRIES, INC.)
• FY2025 10-K: …of providing the promised goods (recreational vehicles or component parts, as applicable), which is satisfied when control of the goods is transferred to the customer. For recreational vehicle sales, the Company recognizes revenue when its performance obligation has been satisfied and control of the product is…
• FY2025 10-K: …adjust for Airxcel and Postle sales to the Company's North American Towable and North American Motorized segments, which are consummated at established transfer prices generally consistent with the selling prices of such components to third-party customers. Total assets include those assets used in the operation of…
• HOG (Harley-Davidson, Inc.)
• FY2025 10-K: …consideration related to previously recognized sales were not material during any periods presented. Shipping and handling costs associated with freight after control of a product has transferred to a customer are accounted for as fulfillment costs. The Company accrues for the shipping and handling in the same period…
• FY2025 10-K: …No. 001-09183)) 10.32* Form of Notice of Award of Restricted Stock Units and Restricted Stock Unit Agreement (Standard International) of Harley-Davidson, Inc. under the Harley-Davidson, Inc. 2020 Incentive Stock Plan first approved for use in February 2023 (incorporated herein by reference to Exhibit 10.43 to the…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.