Zacks Industry Outlook Highlights Dorman Products and Standard Motor Products

For Immediate ReleaseChicago, IL – June 4, 2025 – Today, Zacks Equity Research discusses Dorman Products DORM and Standard Motor Products SMP.2 Auto Replacement Stocks Poised to Gain From the Repair BoomIndustry: Automotive - Replacement PartsLink to article: https://www.zacks.com/commentary/2482172/2-auto-replacement-stocks-poised-to-gain-from-the-repair-boomThe outlook for the Zacks Automotive - Replacement Parts industry remains strong. The aging vehicle fleet in the United States — now averaging 12.6 years — is keeping repair volumes high. While tariff-driven volatility may temper new vehicle sales, it is encouraging owners to repair rather than replace, further boosting demand for parts and services. Meanwhile, the shift toward smart vehicles is opening new growth avenues, even as it requires adaptation to tech-heavy systems. Cost discipline remains important, but companies that can innovate while managing expenses are set to thrive. Industry players like Dorman Products and Standard Motor Products are worth considering at this point.Industry OverviewThe Zacks Automotive - Replacement Parts industry comprises companies that engage in the production, marketing and distribution of replacement components for the automotive aftermarket. The industry players offer replacement systems, components, equipment and parts to repair as well as accessorize vehicles. Some important auto replacement components are engine, steering, drive axle, suspension, brakes and gearbox parts. The auto replacement market is somewhat less exposed to business downturns as consumers are more inclined to spend on replacement parts to maintain their vehicles rather than splurge on new ones. Consumers can either opt for repairing vehicles on their own or avail professional services for the same. The industry is undergoing a radical change, with evolving customer expectations and technological innovation acting as game changers.Key Themes Shaping the IndustryOlder Cars, More Repairs: With the average U.S. vehicle now 12.6 years old, aging cars are hitting the repair shop more often. This growing trend boosts demand for replacement parts, as owners invest in maintenance to keep their vehicles running longer. It’s a big win for the auto replacement parts industry, which thrives as cars stay on the road well past their prime.Tariffs to Cool New Car Sales, Boost Repairs: After a surge in early 2025 car purchases driven by tariff fears, U.S. auto sales are likely to lose steam. With higher vehicle prices and economic uncertainty, many consumers are opting to hold onto their current cars. That shift away from new purchases is expected to lift demand for replacement parts, as more drivers turn to repairs over buying new.Tech-Driven Cars, New Aftermarket Opportunities: As vehicles become more advanced, with electrification, autonomous features, and complex software, the replacement parts industry is evolving fast. Today’s cars depend heavily on sensors, electronics and digital systems, which require specialized components and know-how. This shift is fueling demand for skilled technicians and cutting-edge diagnostic tools. Technology innovation is creating fresh opportunities for growth for industry participants.Balancing Innovation With Cost Control: Innovation is fueling growth in the industry, but it’s also driving up costs. Developing components for EVs, autonomous tech, and high-efficiency vehicles demands heavy investment in R&D, skilled labor, and factory upgrades. In this environment, cost management is crucial. Companies that streamline operations and boost supply chain efficiency will be better positioned to protect margins while meeting automakers’ evolving needs.Zacks Industry Rank Signals Bright ProspectsThe Zacks Automotive – Replacements Parts industry is part of the broader Zacks Auto-Tires-Trucks sector. The industry currently carries a Zacks Industry Rank #23, which places it in the top 9% of around 250 Zacks industries.The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates solid near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.The industry’s positioning in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gaining confidence in this group’s earnings growth potential. Since the beginning of the year, the industry’s earnings estimates for 2025 have moved 2% north.Before we present you with two stocks that are worth considering, let's take a look at the industry’s stock market performance and current valuation.Industry Lags Sector and S&P 500The Zacks Automotive – Replacement Parts industry has underperformed the Auto, Tires and Truck sector and the Zacks S&P 500 composite over the past year. The industry has declined 5.4% against the sector and the S&P 500’s growth of 16.2% and 11.8%, respectively.Industry's Current ValuationSince automotive companies are debt-laden, it makes sense to value them based on the EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization) ratio. On the basis of trailing 12-month enterprise value to EBITDA (EV/EBITDA), the industry is currently trading at 8.61X compared with the S&P 500’s 16.71X and the sector’s trailing 12-month EV/EBITDA of 21.62X. Over the past five years, the industry has traded as high as 12.46X, as low as 7.99X and at a median of 10.39X.2 Stocks to BuyDorman Products: A leading player in the automotive aftermarket, Dorman specializes in replacement and upgrade parts. The company continues to expand its product lineup, introducing hundreds of new direct replacement parts and assemblies that match or surpass original equipment standards. Its acquisition of Super ATV has strengthened its growth prospects. The company’s solid balance sheet, a low debt-to-capitalization ratio of 25% (well below the industry average of 41%) and strong liquidity bode well. Additionally, DORM’s share buybacks demonstrate management’s confidence and commitment to shareholder value.Dorman Products surpassed earnings estimates in each of the trailing four quarters, the average surprise being 28.95%. The Zacks Consensus Estimate for DORM’s 2025 sales and earnings implies year-over-year growth of 5% and 10%, respectively. The stock currently carries a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Standard Motors: It is one of the leading manufacturers and distributors of premium automotive replacement parts for engine management and temperature control systems. The acquisition of Nissens has helped SMP expand its geographic presence, establish a significant global growth platform and improve cost savings efforts. Expansionary initiatives will offer the firm increased capacity to support future growth, reduce risk through a multi-point distribution strategy and enhance product delivery times in specific geographical areas. Low exposure to tariffs and limited reliance on China and strategic supply chain bode well for the company.SMP surpassed earnings estimates in each of the trailing four quarters, the average surprise being 38.55%. The Zacks Consensus Estimate for Standard Motors’ 2025 sales and earnings implies year-over-year growth of 17% and 13%, respectively. The stock currently carries a Zacks Rank #2.Why Haven't You Looked at Zacks' Top Stocks?Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.Today you can access their live picks without cost or obligation.See Stocks Free >>Media ContactZacks Investment Research800-767-3771 ext. 9339support@zacks.comhttps://www.zacks.comPast performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Standard Motor Products, Inc. (SMP): Free Stock Analysis Report Dorman Products, Inc. (DORM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks