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. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in net income, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.
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- PLOW's very impressive revenue growth greatly exceeded the industry average of 21.6%. Since the same quarter one year prior, revenues leaped by 65.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.76, 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 2.51, which clearly demonstrates the ability to cover short-term cash needs.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 20.2% when compared to the same quarter one year prior, going from -$4.27 million to -$3.40 million.
- 35.70% is the gross profit margin for DOUGLAS DYNAMICS INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -24.07% is in-line with the industry average.
- Net operating cash flow has increased to -$7.15 million or 28.72% when compared to the same quarter last year. Despite an increase in cash flow of 28.72%, DOUGLAS DYNAMICS INC is still growing at a significantly lower rate than the industry average of 1564.94%.
-- Written by a member of TheStreet Ratings Staff