NEW YORK ( TheStreet) -- Douglas Dynamics (NYSE: PLOW) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
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- The debt-to-equity ratio is somewhat low, currently at 0.73, 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 1.70, which demonstrates the ability of the company to cover short-term liquidity needs.
- PLOW, with its very weak revenue results, has greatly underperformed against the industry average of 16.5%. Since the same quarter one year prior, revenues plummeted by 63.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. 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 has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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 31.4% in earnings ($0.59 versus $0.86).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Machinery industry. The net income has significantly decreased by 433.5% when compared to the same quarter one year ago, falling from -$0.80 million to -$4.27 million.
-- Written by a member of TheStreet Ratings Staff