Analyzing TAT Technologies (NASDAQ:TATT) and Ducommun (NYSE:DCO)

TAT Technologies (NASDAQ:TATT) and Ducommun (NYSE:DCO) are both small-cap aerospace companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, earnings, institutional ownership, analyst recommendations, profitability, dividends and risk.

Institutional and Insider Ownership

15.1% of TAT Technologies shares are held by institutional investors. Comparatively, 92.2% of Ducommun shares are held by institutional investors. 8.8% of TAT Technologies shares are held by company insiders. Comparatively, 8.9% of Ducommun shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for TAT Technologies and Ducommun, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TAT Technologies	0	1	6	1	3.00
Ducommun	0	2	5	0	2.71

TAT Technologies currently has a consensus target price of $51.33, suggesting a potential downside of 1.07%. Ducommun has a consensus target price of $113.00, suggesting a potential upside of 1.90%. Given Ducommun’s higher possible upside, analysts clearly believe Ducommun is more favorable than TAT Technologies.

Earnings and Valuation

This table compares TAT Technologies and Ducommun”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TAT Technologies	$172.53 million	3.78	$11.17 million	$1.33	39.02
Ducommun	$786.55 million	2.11	$31.50 million	($2.34)	-47.39

Ducommun has higher revenue and earnings than TAT Technologies. Ducommun is trading at a lower price-to-earnings ratio than TAT Technologies, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

TAT Technologies has a beta of 0.89, meaning that its stock price is 11% less volatile than the S&P 500. Comparatively, Ducommun has a beta of 1.07, meaning that its stock price is 7% more volatile than the S&P 500.

Profitability

This table compares TAT Technologies and Ducommun’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TAT Technologies	9.08%	11.10%	8.12%
Ducommun	-4.29%	7.70%	4.53%

Summary

TAT Technologies beats Ducommun on 9 of the 15 factors compared between the two stocks.

About TAT Technologies

TAT Technologies Ltd., together with its subsidiaries, provides solutions and services to the commercial and military aerospace, and ground defense industries in the United States, Israel, and internationally. The company operates through four segments: Original Equipment Manufacturing (OEM) of Heat Transfer Solutions and Aviation Accessories; Maintenance, Repair, and Overhaul (MRO) Services for Heat Transfer Components and OEM of Heat Transfer Solutions; MRO Services for Aviation Components; and Overhaul and Coating of Jet Engine Components. It designs, develops, and manufactures a range of heat transfer solutions, such as pre-cooler and oil/fuel hydraulic heat exchangers used in mechanical and electronic systems in commercial, military, and business aircraft; environmental control and power electronics cooling systems for use in aircraft and ground applications; and a range of other mechanical aircraft accessories and systems, such as pumps, valves, and turbine power units. The company provides MRO services for heat transfer components, as well as for manufacturing heat transfer solutions; and aviation components. In addition, it engages in the operation of a repair station, which provides heat transfer MRO services for airlines, air cargo carriers, maintenance service centers, and the military; and the overhaul and coating of jet engine components, including turbine vanes and blades, fan blades, variable inlet guide vanes, and afterburner flaps. The company was formerly known as Galagraph Ltd. and changed its name to TAT Technologies Ltd. in May 1992. TAT Technologies Ltd. was founded in 1969 and is headquartered in Netanya, Israel.

About Ducommun

Ducommun Incorporated provides engineering and manufacturing services for products and applications used primarily in the aerospace and defense, industrial, medical, and other industries in the United States. The company operates through two segments, Electronic Systems and Structural Systems. The Electronic Systems segment provides cable assemblies and interconnect systems; printed circuit board assemblies; electronic, electromechanical, and mechanical components and assemblies, as well as lightning diversion systems; and radar enclosures, aircraft avionics racks, shipboard communications and control enclosures, printed circuit board assemblies, cable assemblies, wire harnesses, interconnect systems, lightning diversion strips, surge suppressors, conformal shields, and other assemblies. The segment also supplies engineered products, including illuminated pushbutton switches and panels for aviation and test systems; microwave and millimeter switches and filters for radio frequency systems and test instrumentation; and motors and resolvers for motion control. In addition, this segment provides engineering expertise for aerospace system design, development, integration, and testing. The Structural Systems segment designs, engineers, and manufactures contoured aluminum, titanium, and Inconel aero structure components; structural assembly products, such as winglets, engine components, and fuselage structural panels; aerodynamic systems; and metal and composite bonded structures and assemblies comprising aircraft wing spoilers, large fuselage skins, rotor blades on rotary-wing aircraft and components, flight control surfaces, engine components, ammunition handling systems, and magnetic seals. It serves commercial aircraft, military fixed-wing aircraft, military and commercial rotary-wing aircraft, and space programs, as well as industrial, medical, and other end-use markets. The company was founded in 1849 and is headquartered in Santa Ana, California.