Astronics vs. Ducommun: Which Aerospace Supplier Is the Better Player Now?

An analysis comparing aerospace suppliers Astronics (ATRO) and Ducommun (DCO) favors Astronics as a more compelling investment currently. ATRO reported an 11.3% year-over-year sales increase in Q1 2025, driven by strong commercial and military sales, and record bookings of $279.7 million, while DCO's revenue grew only 1.7% due to headwinds in commercial markets; despite ATRO's higher valuation and leverage, its superior ROE and stock performance suggest stronger growth potential, leading to a recommendation to consider ATRO for portfolios seeking exposure to the aerospace upcycle, while suggesting a cautious stance on DCO.

Analysis

The aerospace supplier sector is experiencing tailwinds from increasing aircraft production, aftermarket services, and defense spending, benefiting both Astronics (ATRO) and Ducommun (DCO). Astronics demonstrated robust Q1 2025 performance with an 11.3% year-over-year sales increase, fueled by a 13.3% surge in commercial transport sales and a significant 94.8% rise in military aircraft sales, culminating in record bookings of $279.7 million and a 1.36:1 book-to-bill ratio. A notable contract win with NASA/Boeing for the X-66 demonstrator further supports ATRO's growth outlook. In contrast, Ducommun reported a modest 1.7% Q1 2025 revenue growth, supported by its defense business, though net income improved 53% due to higher gross profit; however, DCO faced headwinds in its commercial segment, specifically from lower Boeing 737 MAX and in-flight entertainment product revenues. While both companies exhibit near-term solvency, with ATRO holding $26 million in cash against $160 million in long-term debt (nil current debt) and DCO holding $31 million cash against $230 million long-term debt ($13 million current debt), ATRO is noted to be more leveraged on a debt-to-capital basis. ATRO has significantly outperformed DCO in stock price appreciation over the past year (53.3% vs. 20.2%) and exhibits a superior Return on Equity. Zacks consensus estimates project a 37.6% EPS growth for ATRO in 2025 on 6.4% sales growth, compared to DCO's 11.6% EPS growth on 4.8% sales growth. Despite ATRO trading at a higher forward P/E multiple (19.42X vs. DCO's 17.52X), its stronger operational momentum and growth metrics position it favorably. Both companies face sector-specific risks such as slower-than-anticipated OEM production increases and potential trade tariff impacts.

Key Decisions for Investors

• Investors seeking growth within the aerospace sector may find Astronics (ATRO) a compelling opportunity, given its strong Q1 2025 sales growth across commercial and military segments, record bookings, positive new contract momentum, and superior ROE, though its premium valuation and higher leverage should be considered.
• A more cautious approach is warranted for Ducommun (DCO) due to its slower revenue growth, particularly in commercial markets linked to Boeing 737 MAX production, although its solid defense segment performance and improved profitability may support existing positions.
• Closely monitor OEM aircraft production rates, especially from Boeing and Airbus, and developments regarding U.S. import tariffs, as these factors represent key risks that could impact the near-term performance of both ATRO and DCO.