Should You Investigate Douglas Dynamics, Inc. (NYSE:PLOW) At US$38.84?

By
Simply Wall St
Published
August 14, 2021
NYSE:PLOW
Source: Shutterstock

While Douglas Dynamics, Inc. (NYSE:PLOW) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the NYSE, rising to highs of US$45.64 and falling to the lows of US$37.94. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Douglas Dynamics' current trading price of US$38.84 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Douglas Dynamics’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for Douglas Dynamics

Is Douglas Dynamics still cheap?

Good news, investors! Douglas Dynamics is still a bargain right now. According to my valuation, the intrinsic value for the stock is $51.74, but it is currently trading at US$38.84 on the share market, meaning that there is still an opportunity to buy now. Douglas Dynamics’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

What kind of growth will Douglas Dynamics generate?

earnings-and-revenue-growth
NYSE:PLOW Earnings and Revenue Growth August 15th 2021

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 2.4% expected over the next year, growth doesn’t seem like a key driver for a buy decision for Douglas Dynamics, at least in the short term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since PLOW is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on PLOW for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy PLOW. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.

So while earnings quality is important, it's equally important to consider the risks facing Douglas Dynamics at this point in time. You'd be interested to know, that we found 2 warning signs for Douglas Dynamics and you'll want to know about them.

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