Key Highlights

  • DORM is trading down 0.08% at $123.85 on October 21, with a market capitalization of about $3.68 billion.
  • Third-quarter results are due after the close on Monday, October 26, with a call on Tuesday, October 27 at 8:00 a.m. ET.
  • Full-year net sales growth guidance is 3% to 5%, cut from 7% to 9%.
  • Second-quarter adjusted gross margin was 46.1%, about 38% excluding a tariff refund.
  • Trailing earnings per share are $7.22, a P/E of 17.16, and the company pays no dividend.

Will Tariff Recoveries Keep Dorman Products Margins Elevated When It Reports on October 26?

Dorman Products (NASDAQ:DORM) is trading down 0.08% at $123.85 on October 21, and no company announcement was identified for the session. The company confirmed that it will report third-quarter results after the market close on Monday, October 26, for the quarter ended September 26, with a call on Tuesday, October 27 at 8:00 a.m. ET.

The central question is how much of the margin gain was tariff cost recovery. Second-quarter adjusted gross margin reached 46.1% against 40.6% a year earlier, but management said it was about 38% excluding a refund of tariffs paid under the IEEPA program, and it guided to a fourth-quarter exit rate near 40%. Dorman supplies aftermarket replacement parts, fasteners and hardware for vehicles.

What Did the Latest Call Set Up for the Third Quarter?

In the second quarter, net sales were a record $544.6 million, up 0.7%, short of expectations of roughly $582 million. Adjusted diluted EPS was $3.08, up 50%, but $1.90 excluding the $1.18 per share refund. Adjusted operating margin was 22.3%, or 14.2% excluding the refund, down 210 basis points on lower Light Duty volume.

Light Duty sales of $424 million were flat and Heavy Duty rose 7%. Management began targeted price cuts as tariff costs fell, expects them to continue through the second half, and said Section 301 tariffs replacing the IEEPA program lower ongoing costs for much of the portfolio.

On August 3 the company cut full-year net sales growth guidance to 3% to 5% from 7% to 9%, while raising adjusted EPS to $8.50 to $8.80, which includes about $0.30 from the refund. Excluding it, adjusted EPS is guided at $8.20 to $8.50, and adjusted operating margin at about 15.5% to 16.5%. The outlook implies mid-single-digit growth in the second half from new business wins and product introductions.

What Would a Good or Bad Report Look Like for Dorman?

A positive signal would be sales growth moving toward the mid-single-digit pace implied for the second half, gross margin tracking toward the 40% exit rate and the guidance held. Free cash flow was $144 million in the second quarter, about $62 million excluding the refund.

A negative signal would be another cut to the sales outlook, continued Light Duty volume pressure, deeper price reductions or softer discretionary do-it-yourself demand.

Market capitalization is about $3.68 billion. Trailing earnings per share are $7.22, a P/E of 17.16, with trailing growth of negative 1.80%. The consensus analyst rating is Strong buy.

How Do Buybacks and Balance Sheet Shape the Outlook?

Second-quarter repurchases were $47 million, with $363 million remaining under the authorization through 2027. Net leverage was 0.69 times adjusted EBITDA. Roth MKM has a Buy rating with a $163 target dated September 21, a data point and not an endorsement. On October 26, investors will look for sales growth within the guided range and a margin consistent with the fourth-quarter exit rate.