NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, good cash flow from operations and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and feeble growth in the company's earnings per share.
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Highlights from the ratings report include:
- The debt-to-equity ratio is somewhat low, currently at 0.72, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with this, the company maintains a quick ratio of 2.65, which clearly demonstrates the ability to cover short-term cash needs.
- Net operating cash flow has significantly increased by 52.05% to -$7.02 million when compared to the same quarter last year. In addition, DOUGLAS DYNAMICS INC has also vastly surpassed the industry average cash flow growth rate of -37.23%.
- 36.30% is the gross profit margin for DOUGLAS DYNAMICS INC which we consider to be strong. Regardless of PLOW's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PLOW's net profit margin of 13.70% compares favorably to the industry average.
- The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Machinery industry average. The net income has decreased by 7.7% when compared to the same quarter one year ago, dropping from $9.72 million to $8.97 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Machinery industry and the overall market, DOUGLAS DYNAMICS INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
Douglas Dynamics, Inc. designs, manufactures, and sells snow and ice control equipment for light trucks in the United States and Canada. It products include snowplows, sand and salt spreaders, and related parts and accessories. The company has a P/E ratio of 21.9, above the average automotive industry P/E ratio of 20 and above the S&P 500 P/E ratio of 17.7. Douglas Dynamics has a market cap of $314.9 million and is part of the
industry. Shares are down 4.4% year to date as of the close of trading on Thursday.
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-- Written by a member of TheStreet Ratings Staff
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.