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 lackluster performance in the stock itself.
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- PLOW's debt-to-equity ratio of 0.85 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that PLOW's debt-to-equity ratio is mixed in its results, the company's quick ratio of 1.95 is high and demonstrates strong liquidity.
- PLOW, with its decline in revenue, underperformed when compared the industry average of 0.3%. 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 36.0% in earnings ($0.55 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 6.20% trails the industry average.
- Net operating cash flow has decreased to -$18.05 million or 17.79% when compared to the same quarter last year. Despite a decrease in cash flow DOUGLAS DYNAMICS INC is still fairing well by exceeding its industry average cash flow growth rate of -52.24%.
-- Written by a member of TheStreet Ratings Staff