DORMAN PRODUCTS INC (NASDAQ:DORM) – A Strong Candidate for GARP Investors

DORMAN PRODUCTS INC (NASDAQ:DORM) stands out as a compelling pick for investors seeking growth at a reasonable price (GARP). The company, which supplies automotive replacement and upgrade parts, meets key criteria from Peter Lynch’s investment strategy, balancing solid growth with sound financial health and reasonable valuation.

Why DORM Fits the GARP Approach

• Strong Earnings Growth: DORM has delivered an impressive 5-year average EPS growth of 21.83%, well above the 15% minimum threshold in Lynch’s strategy. This indicates consistent profitability and execution.
• Attractive Valuation: With a PEG ratio (5Y) of 0.75, the stock is priced below the Lynch benchmark of 1, suggesting it is undervalued relative to its growth potential.
• Healthy Financials: The company maintains a Debt/Equity ratio of 0.33, below Lynch’s preferred 0.6 limit, reflecting a conservative capital structure. Additionally, its Current Ratio of 2.62 signals strong liquidity.
• High Profitability: DORM’s Return on Equity (ROE) of 16.05% exceeds Lynch’s 15% requirement, demonstrating efficient use of shareholder capital.

Fundamental Snapshot

DORM earns a fundamental rating of 7/10, with standout scores in profitability (9/10) and financial health (8/10). Margins are strong, with a Profit Margin of 10.48% and Operating Margin of 15.55%, both ranking near the top of its industry. While valuation appears fair (P/E of 16.32), the company’s growth and financial stability justify further research.

For a deeper dive, review the full fundamental analysis of DORM.

Our Peter Lynch Strategy screener lists more stocks matching these criteria and is updated daily.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should always conduct your own analysis before making investment decisions.