Company Overview - Dorman Products (DORM) currently holds a Momentum Style Score of A, indicating strong potential for momentum investing [3] - The company has a Zacks Rank of 2 (Buy), suggesting favorable market performance [4] Price Performance - DORM shares have increased by 17.16% over the past week, outperforming the Zacks Automotive - Replacement Parts industry, which rose by 10.3% [6] - Over the past month, DORM's price change is 27.3%, significantly higher than the industry's 2.51% [6] - In the last quarter, DORM shares have gained 23.48%, and over the past year, they have increased by 44.88%, while the S&P 500 has only moved 10.12% and 19.99%, respectively [7] Trading Volume - The average 20-day trading volume for DORM is 249,607 shares, which serves as a bullish indicator when combined with rising stock prices [8] Earnings Outlook - Over the past two months, two earnings estimates for DORM have been revised upwards, increasing the consensus estimate from $7.82 to $8.40 [10] - For the next fiscal year, two estimates have also moved upwards with no downward revisions [10] Conclusion - Considering the strong price performance, positive earnings outlook, and favorable momentum indicators, Dorman Products is positioned as a solid momentum pick with a 2 (Buy) rating and a Momentum Score of A [12]

Dorman Products (DORM 4.64%), a leading supplier of automotive replacement parts and fasteners for the motor vehicle aftermarket, released its second quarter results on August 4, 2025. The headline news is clear: it beat consensus expectations by a wide margin on both GAAP revenue and non-GAAP adjusted earnings per share, fueled by gains in its core Light Duty segment and successful supply chain initiatives. GAAP revenue reached $541.0 million, topping the analyst estimate of $517.0 million (GAAP), while ad ...

Industry Outlook - The Zacks Automotive - Replacement Parts industry has a strong outlook due to the aging vehicle fleet in the U.S., which averages 12.6 years, leading to high repair volumes [1][3] - Tariff-driven volatility may reduce new vehicle sales, encouraging vehicle owners to repair rather than replace, thus increasing demand for parts and services [1][4] - The shift towards smart vehicles presents new growth opportunities, requiring adaptation to technology-heavy systems [1][5] Industry Overview - The industry includes companies that produce, market, and distribute replacement components for the automotive aftermarket, focusing on essential parts like engines, brakes, and gearboxes [2] - The auto replacement market is less sensitive to economic downturns as consumers prefer maintaining their vehicles over purchasing new ones [2] Key Themes - The trend of older cars requiring more repairs boosts demand for replacement parts, benefiting the industry as vehicles remain operational longer [3] - Economic uncertainty and higher vehicle prices are leading consumers to hold onto their cars, increasing the demand for repairs [4] - The advancement of vehicle technology necessitates specialized components and skilled technicians, creating new opportunities for growth [5] Cost Management and Innovation - While innovation drives growth, it also increases costs due to the need for R&D and skilled labor, making cost management essential for companies [6] Industry Ranking and Performance - The Zacks Automotive - Replacement Parts industry ranks 23, placing it in the top 9% of approximately 250 Zacks industries, indicating solid near-term prospects [7][8] - The industry's earnings estimates for 2025 have increased by 2% since the beginning of the year, reflecting growing analyst confidence [9] Market Performance - The industry has underperformed compared to the Auto, Tires, and Truck sector and the S&P 500 over the past year, declining by 5.4% [11] Valuation - The industry is currently trading at an EV/EBITDA ratio of 8.61X, significantly lower than the S&P 500's 16.71X and the sector's 21.62X [14] Investment Opportunities - **Dorman Products (DORM)**: A leading player in the automotive aftermarket, known for expanding its product lineup and maintaining a low debt-to-capitalization ratio of 25% [18] - DORM has consistently surpassed earnings estimates, with a consensus estimate for 2025 indicating year-over-year growth of 5% in sales and 10% in earnings [19] - **Standard Motor Products (SMP)**: A major manufacturer of automotive replacement parts, benefiting from strategic acquisitions and low exposure to tariffs [22] - SMP has also exceeded earnings estimates, with a consensus estimate for 2025 showing year-over-year growth of 17% in sales and 13% in earnings [23]

Core Viewpoint - The Zacks Automotive Replacement Parts industry is experiencing growth due to an aging vehicle fleet, increased complexity of modern vehicles, and rising car prices driven by tariffs, making repairs a more attractive option for consumers [1][5]. Industry Overview - The industry includes companies that produce, market, and distribute replacement components for the automotive aftermarket, focusing on essential parts like engines, brakes, and gearboxes [2]. - The market is less sensitive to economic downturns as consumers prioritize vehicle maintenance over purchasing new cars [2]. Key Themes Shaping the Industry - The average age of vehicles in the U.S. reached 12.6 years in 2024, leading to increased demand for repairs and maintenance [3]. - The shift towards electrification and advanced technologies in vehicles is creating new opportunities for skilled technicians and diagnostic tools [4]. - Upcoming tariffs on imported vehicles are expected to raise new car prices significantly, prompting more consumers to opt for repairs [5]. Tariffs and Supply Chain Impact - Tariffs on parts from Canada and Mexico could disrupt the supply chain, raising costs for automakers and consumers, and potentially leading to job losses [6]. Industry Ranking and Performance - The Zacks Automotive – Replacement Parts industry ranks 51, placing it in the top 21% of around 250 Zacks industries, indicating solid near-term prospects [7][8]. - The industry has underperformed compared to the Auto, Tires, and Truck sector and the S&P 500, with a 14% decline over the past year [10]. Current Valuation - The industry is trading at an EV/EBITDA ratio of 8.87X, significantly lower than the S&P 500's 17.08X and the sector's 18.27X, suggesting attractive valuation compared to historical levels [12]. Company Highlights - **Standard Motor Products (SMP)**: Focuses on premium automotive replacement parts, with a recent acquisition aimed at expanding its global presence. The company has a low long-term debt-to-capital ratio of 0.18 and has repurchased $10.4 million in shares [14][15]. - **LKQ Corporation**: A leading provider of replacement parts, with a recent acquisition enhancing its distribution capabilities. The company returned $678 million to shareholders in 2024 [17][18]. - **Dorman Products**: Specializes in replacement and upgrade parts, with a strong balance sheet and a low debt-to-capitalization ratio of 25%. The company has consistently surpassed earnings estimates [20][21].