DORM

Dorman is a textbook quality compounder hiding in a boring corner of the auto aftermarket. The five-year revenue arc — $1.35B (FY2021) → $2.13B (FY2025) — is +58% cumulative, and the company is now layering margin on top: gross profit grew +11.3% on +6.0% revenue in FY2025, lifting gross margin to 42.1% and dropping diluted EPS +8.1% to $6.64. Net income of $204M on $2.13B revenue (9.6% net margin, 13.8% ROE) is in line with a high-quality specialty distributor, and the share count shrank 1.3% as management repurchased 313,334 shares for $39.8M per the MD&A. At $131.87 the stock trades at 19.9x earnings and 1.9x sales — a reasonable, not stretched, multiple for a business that has compounded earnings through a tough freight/inventory cycle.

The balance sheet is moving the right way. Stockholders' equity grew +14.2% to $1.48B while long-term debt fell -8.4% to $402M, and the MD&A confirms management actively repaid $42.1M of debt in 2025. Current assets of $1.52B against current liabilities of just $493M is a ~3.1x current ratio — ample working-capital cushion even as cash itself dipped to $49.4M. The one numerical yellow flag is operating cash flow: $114M in FY2025 is -50.8% YoY and only ~56% of net income, suggesting working-capital build (likely inventory and receivables tied to the 6% revenue growth and 5,560 new SKUs launched). That gap needs to close in FY2026 for the buy case to keep its conviction.