According to the Wall Street Journal, Japanese auto parts suppliers are having a hard time getting product out the door due to the earthquake and tsunami. North American car manufacturers will soon face parts shortages that could affect production here. If there are slowdowns, parts suppliers on this side of the Pacific could feel the pain. One company that won't suffer a slowdown is Pennsylvania-based automotive replacement parts supplier, Dorman Products (Nasdaq:DORM). Its business has never been better and even though its stock is trading near an all-time high, I believe this is just the beginning of a move much higher.

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Latest Financial Results
Its fourth quarter and year-end results were outstanding. Revenue grew 27% in Q4 to $122.5 million while full-year sales were up 20.8% to $455.7 million. Moving down the income statement, gross and operating margins during the fourth quarter improved 80 and 260 basis points respectively. For the entire year, they improved 300 and 580 basis points. In terms of the bottom line, its fourth quarter earnings per share grew 56% to 67 cents, while full-year earnings jumped 73% to $2.55. CEO Steven Berman attributes its success in 2010 to a record number of new product introductions and sees more of the same in 2011. Analysts' EPS estimate for 2011 is $2.89 and $3.25 in 2012.

Past Financial Results
Dorman's financial performance in the past decade has been a model of consistency and stable growth. Its revenues have increased in nine consecutive years while net income has risen in six of those years. It's a commendable track record, especially when you consider the economic situation the last three years. Very few companies of any size can make this claim and it's for this reason its stock sits just 18.5% off the five-year high of $49.32, which also happens to be an all-time high.

Dorman Products and Peers

Company EV/EBITDA
Dorman Products (Nasdaq:DORM) 7.7
Superior Industries International (NYSE:SUP) 4.7
Modine Manufacturing (NYSE:MOD) 7.5
American Axle & Manufacturing (NYSE:AXL) 5.0
Titan International (NYSE:TWI) 14.1

Strong Management
Given Dorman's 2009 letter to shareholders, some wonder if the year's strong results were lucky given relatively flat profits the previous five years. It's a fair question. However, the reality is that only two of those years, 2006 and 2008, were disappointments and even then profits were more than satisfactory. It's a testament to the company's passion for excellence; a philosophy developed by the Berman brothers, founders of a small automotive parts distribution business in 1978 that they built it into an extremely successful company. Sadly, Richard Berman died prematurely in January from illness and his brother Steven took over the reins. I suspect very little will change in the future and that's a good thing.

Bottom Line
Dorman Products went public in 1991. In the 20 years since, the Nasdaq cumulatively outperformed its stock until early in 2010 when it finally pulled ahead. It's for this reason; combined with everything I've said previously, that leads me to believe this is only the beginning of an extended run to new highs. (Find out what to consider before taking a ride with stocks from this industry. Check out Analyzing Auto Stocks.)

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