Financial Analysis: GUD (OTCMKTS:GUDHF) vs. Douglas Dynamics (NYSE:PLOW)

GUD (OTCMKTS:GUDHF) and Douglas Dynamics (NYSE:PLOW) are both consumer cyclical companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, valuation, dividends, analyst recommendations and risk.

Dividends

GUD pays an annual dividend of C$0.36 per share and has a dividend yield of 5.1%. Douglas Dynamics pays an annual dividend of $1.18 per share and has a dividend yield of 4.2%. GUD pays out 85.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Douglas Dynamics pays out 100.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Douglas Dynamics has increased its dividend for 14 consecutive years. GUD is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
GUD	N/A	N/A	N/A
Douglas Dynamics	5.03%	13.38%	5.02%

Institutional & Insider Ownership

16.5% of GUD shares are held by institutional investors. Comparatively, 91.9% of Douglas Dynamics shares are held by institutional investors. 2.5% of Douglas Dynamics shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for GUD and Douglas Dynamics, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GUD	0	0	0	0	N/A
Douglas Dynamics	0	1	1	0	2.50

Douglas Dynamics has a consensus price target of $28.00, suggesting a potential upside of 0.29%. Given Douglas Dynamics’ higher possible upside, analysts plainly believe Douglas Dynamics is more favorable than GUD.

Valuation & Earnings

This table compares GUD and Douglas Dynamics”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GUD	N/A	N/A	N/A	C$0.42	16.71
Douglas Dynamics	$568.18 million	1.13	$23.72 million	$1.17	23.86

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

Summary

Douglas Dynamics beats GUD on 11 of the 13 factors compared between the two stocks.

About GUD

GUD Holdings Limited, through its subsidiaries, manufactures, imports, distributes, and sells automotive products in Australia, New Zealand, Thailand, South Korea, France, and the United States. It operates through Automotive, Auto Pacific Group (APG), and Davey segments. The Automotive segment offers automotive and heavy-duty filters for cars, trucks, and agricultural and mining equipment; automotive electrical and lighting products; and fuel pumps and associated products and accessories for the automotive after-market. The APG segment manufactures and markets towing, trailering, functional accessories, and associated products for the automotive aftermarket and original equipment manufacturer customers. The Davey segment provides pumps and pressure systems for household and farm water; water transfer pumps; swimming pool products; spa bath controllers; and pumps and water purification equipment. The company was incorporated in 1958 and is based in Altona North, Australia.

About Douglas Dynamics

Douglas Dynamics, Inc. operates as a manufacturer and upfitter of commercial work truck attachments and equipment in North America. It operates through two segments, Work Truck Attachments and Work Truck Solutions. The Work Truck Attachments segment manufactures and sells snow and ice control attachments, including snowplows, and sand and salt spreaders for light trucks and heavy duty trucks, as well as various related parts and accessories. The Work Truck Solutions segment primarily manufactures municipal snow and ice control products; provides truck and vehicle upfits where it attaches component pieces of equipment, truck bodies, racking, and storage solutions to a vehicle chassis for use by end users for work related purposes; and manufactures storage solutions for trucks and vans, and cable pulling equipment for trucks. This segment also offers up-fit and storage solutions. It also provides customized turnkey solutions to governmental agencies, such as Departments of Transportation and municipalities. The company sells its products under the FISHER, SNOWEX, WESTERN, TURFEX, SWEEPEX, HENDERSON, BRINEXTREME, and DEJANA brands. It distributes its products primarily to professional snowplowers who are contracted to remove snow and ice from commercial and residential areas. The company was founded in 1948 and is headquartered in Milwaukee, Wisconsin.