Entering text into the input field will update the search result below

Here's Why Dorman Products Belongs In Your Portfolio

William Bias profile picture
William Bias


  • Dorman Products distributes automotive parts that enable consumers to save money by keeping their old cars running longer.
  • Dorman Products has taken advantage of the frugal mindset of the automotive consumer.
  • Dorman Products has no long-term debt.

It's important for long-term investors to develop a guide for doing their investment research. Over the years I have developed questions to guide me in my thinking when researching the publicly traded universe. Let's talk about Dorman Products (NASDAQ: NASDAQ:DORM).

1.) What does the company do?

When you buy shares in a company you effectively become part owner of that company. Therefore, it's important for an investor to understand what a company sells. Dorman Products is an automotive and heavy duty truck parts distributor catering to dealers, other distributors, automotive parts retailers and salvage yards. It sells things such as radiator fan assemblies, tire pressure monitor sensors and exhaust manifolds. Some of the brand names it distributes parts under include Help!, First Stop and AutoGrade.

2.) What do the fundamentals look like?

Investors should look for companies that grow revenue and free cash flow over the long-term, retaining some of that cash for reinvestment back into the business and for economic hard times. Excellent revenue and free cash flow growth serve as catalysts for superior long-term gains. Over the past five years, Dorman products has increased its revenue, net income and free cash flow 85%, 139%, and 4%, respectively (see chart below).

DORM Revenue (<a href=

DORM Revenue (NYSE:TTM) data by YCharts

Dorman Products' management is quick to point out that the primary driver of the top and bottom lines is the increasingly frugal nature of the American car consumer due to the last recession. Frugal consumers looking to forgo a large purchase in an effort to save money are certainly a strong demand catalyst for Dorman Products' parts. Moreover, new product introductions helped drive fundamental expansion.

Dorman Products is off to a slow start in FY 2015. In the most recent quarter, the company grew its revenue 3%, and its net income declined 9% year-over-year. However, its free cash

This article was written by

William Bias profile picture
I have been analyzing stocks since 1992 and a freelance writer since 2012.

Analyst’s Disclosure: The author is long DORM. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (4)

Quoting the 10-k filing:

"Sales of Accounts Receivable. We have entered into several customer sponsored programs administered by unrelated
financial institutions that permit us to sell certain accounts receivable at discounted rates to the financial institutions. Transactions under
these agreements were accounted for as sales of accounts receivable and were removed from our Consolidated Balance Sheet at the time
of the sales transactions. During fiscal 2014, fiscal 2013 and fiscal 2012, we sold $477.9 million, $406.4 million and $312.7 million,
respectively, pursuant to these agreements. If receivables had not been sold, $298.9 million and $267.8 million of additional receivables
would have been outstanding at December 27, 2014 and December 28, 2013, respectively, based on standard payment terms. ..."

If I do the math right, in 2014 goods of $179.6 million are not sold, compared to $129.0 million in 2013. The numbers in 2012: $131.2 million, 2011: $70.5 million.

All sales of Accounts Receivable:

2010: 104.3M
2011: 208M
2012: 312.7M
2013: 406.4M
2014: 477.9M

The growth of renvenue in the same time is 1.7 fold.

The numbers sound bad, but I don't believe that this is a big problem. Such a big number of unsold stuff in the shelves of the stores is inpossible. Why should AZO and so on block their valuable shelves with stuff, they can't sell?

(excuse my mistakes, I'm from Germany)
platonicbomb profile picture
"prudent financial management"
DORM growth has become entirely dependent on factored financing. You can only stretch that so far. This won't end well.
William Bias profile picture
Factored financing. Thanks for the input.

platonicbomb profile picture
You're welcome. This one is not an easy company to figure out, you have to go deep into the 10-K filings and do a lot of interpretation.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.