Analyzing Douglas Dynamics (NYSE:PLOW) & Gates Industrial (NYSE:GTES)

Gates Industrial (NYSE:GTES) and Douglas Dynamics (NYSE:PLOW) are both industrials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, profitability, dividends, valuation, analyst recommendations and earnings.

Institutional & Insider Ownership

98.5% of Gates Industrial shares are held by institutional investors. Comparatively, 91.8% of Douglas Dynamics shares are held by institutional investors. 2.8% of Gates Industrial shares are held by insiders. Comparatively, 1.5% of Douglas Dynamics shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Volatility and Risk

Gates Industrial has a beta of 1.33, suggesting that its stock price is 33% more volatile than the S&P 500. Comparatively, Douglas Dynamics has a beta of 1.14, suggesting that its stock price is 14% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Gates Industrial and Douglas Dynamics, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gates Industrial	0	3	9	0	2.75
Douglas Dynamics	0	2	2	1	2.80

Gates Industrial presently has a consensus price target of $32.18, suggesting a potential upside of 26.07%. Douglas Dynamics has a consensus price target of $51.67, suggesting a potential upside of 36.58%. Given Douglas Dynamics’ stronger consensus rating and higher possible upside, analysts plainly believe Douglas Dynamics is more favorable than Gates Industrial.

Profitability

This table compares Gates Industrial and Douglas Dynamics’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Gates Industrial	10.37%	10.42%	5.46%
Douglas Dynamics	8.71%	22.97%	9.74%

Earnings & Valuation

This table compares Gates Industrial and Douglas Dynamics”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gates Industrial	$3.44 billion	1.86	$251.40 million	$1.44	17.73
Douglas Dynamics	$656.05 million	1.33	$46.90 million	$2.76	13.71

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

Summary

Gates Industrial beats Douglas Dynamics on 9 of the 15 factors compared between the two stocks.

About Gates Industrial

Gates Industrial Corporation plc designs and manufactures engineered power-transmission and fluid-power solutions. Its products include belts and related components, as well as hoses and hydraulic systems used to transfer power and fluids in equipment and vehicles. The company serves customers across a range of industrial and mobility markets, including manufacturing, construction, agriculture, transportation and energy. Its products are used in both original-equipment applications and replacement markets.

About Douglas Dynamics

Douglas Dynamics, Inc. designs, manufactures and sells equipment and attachments for work trucks, with a primary focus on products used for snow and ice control. Its offerings include snowplows, spreaders and related equipment for commercial, municipal and government customers. The company serves the work-truck market through brands including WESTERN, FISHER and SnowEx. Its products are distributed through dealer networks, with service and support provided through those channels. Founded in 1948, Douglas Dynamics has expanded beyond snow and ice equipment into additional work-truck solutions, including truck bodies and related equipment.