Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. NEW YORK (TheStreet) -- Douglas Dynamics (NYSE:PLOW) has been upgraded by TheStreet Ratings from hold to buy. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
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- The debt-to-equity ratio is somewhat low, currently at 0.85, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. To add to this, PLOW has a quick ratio of 1.95, which demonstrates the ability of the company to cover short-term liquidity needs.
- PLOW, with its decline in revenue, underperformed when compared the industry average of 12.3%. Since the same quarter one year prior, revenues fell by 29.4%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- DOUGLAS DYNAMICS INC's earnings per share declined by 44.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, DOUGLAS DYNAMICS INC increased its bottom line by earning $0.86 versus $0.06 in the prior year. For the next year, the market is expecting a contraction of 68.6% in earnings ($0.27 versus $0.86).
- The gross profit margin for DOUGLAS DYNAMICS INC is currently lower than what is desirable, coming in at 32.50%. Regardless of PLOW's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 6.21% trails the industry average.
- In its most recent trading session, PLOW has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
-- Written by a member of TheStreet Ratings Staff
Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. It's Official: Action Alerts PLUS beats the S&P 500 with Dividends Reinvested! Cramer and Link were up 16.72% in 2012. Were you? See what they are trading for 14-days FREE.
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