Douglas Dynamics (NYSE: PLOW) and PACCAR (NASDAQ:PCAR) are both auto/tires/trucks companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, earnings, dividends, risk and valuation.

Risk & Volatility

Douglas Dynamics has a beta of 1.13, meaning that its share price is 13% more volatile than the S&P 500. Comparatively, PACCAR has a beta of 1.18, meaning that its share price is 18% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for Douglas Dynamics and PACCAR, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Douglas Dynamics 0 0 2 0 3.00
PACCAR 1 10 9 0 2.40

Douglas Dynamics presently has a consensus price target of $42.00, suggesting a potential upside of 0.36%. PACCAR has a consensus price target of $75.24, suggesting a potential upside of 0.42%. Given PACCAR’s higher probable upside, analysts plainly believe PACCAR is more favorable than Douglas Dynamics.

Profitability

This table compares Douglas Dynamics and PACCAR’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Douglas Dynamics 6.16% 14.96% 4.82%
PACCAR 7.77% 18.61% 6.23%

Valuation & Earnings

This table compares Douglas Dynamics and PACCAR’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Douglas Dynamics $465.33 million 2.03 $86.94 million $1.26 33.21
PACCAR $17.26 billion 1.53 $2.36 billion $3.74 20.03

PACCAR has higher revenue and earnings than Douglas Dynamics. PACCAR is trading at a lower price-to-earnings ratio than Douglas Dynamics, indicating that it is currently the more affordable of the two stocks.

Dividends

Douglas Dynamics pays an annual dividend of $0.96 per share and has a dividend yield of 2.3%. PACCAR pays an annual dividend of $1.00 per share and has a dividend yield of 1.3%. Douglas Dynamics pays out 76.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. PACCAR pays out 26.7% of its earnings in the form of a dividend. Douglas Dynamics has increased its dividend for 4 consecutive years. Douglas Dynamics is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

89.3% of Douglas Dynamics shares are held by institutional investors. Comparatively, 62.1% of PACCAR shares are held by institutional investors. 3.2% of Douglas Dynamics shares are held by insiders. Comparatively, 2.6% of PACCAR shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

PACCAR beats Douglas Dynamics on 10 of the 17 factors compared between the two stocks.

Douglas Dynamics Company Profile

Douglas Dynamics, Inc. is a manufacturer and up-fitter of commercial vehicle attachments and equipment. The Company’s portfolio includes snow and ice management attachments sold under the BLIZZARD, FISHER, HENDERSON, SNOWEX and WESTERN brands, turf care equipment under the TURFEX brand and industrial maintenance equipment under the SWEEPEX brand. The Company operates through two segments: Work Truck Attachments and Work Truck Solutions. The Work Truck Attachments segment includes snow and ice management attachments sold under the FISHER, WESTERN, HENDERSON and SNOWEX brands. The Work Truck Solutions segment includes the up-fit of attachments and storage solutions for commercial work vehicles under the DEJANA brand and its related sub-brands. In its Work Truck Attachments segment, the Company offers a product line of snowplows, and sand and salt spreaders for light and heavy duty trucks. Its Work Truck Solutions products consist of truck and vehicle up-fits.

PACCAR Company Profile

PACCAR Inc (PACCAR) is a technology company. The Company’s segments include Truck, Parts and Financial Services. The Truck segment includes the design, manufacture and distribution of light-, medium- and heavy-duty commercial trucks. The Company’s trucks are marketed under the Kenworth, Peterbilt and DAF nameplates. It also manufactures engines, primarily for use in the Company’s trucks, at its facilities in Columbus, Mississippi; Eindhoven, the Netherlands, and Ponta Grossa, Brazil. The Parts segment includes the distribution of aftermarket parts for trucks and related commercial vehicles. The Financial Services segment includes finance and leasing products and services provided to customers and dealers. Its Other business includes the manufacturing and marketing of industrial winches. The Company operates in Australia and Brazil and sells trucks and parts to customers in Asia, Africa, Middle East and South America.

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