Caterpillar (CAT) versus Douglas Dynamics (PLOW) Financial Review

Caterpillar (NYSE: CAT) and Douglas Dynamics (NYSE:PLOW) are both industrial products companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, risk, profitability, institutional ownership and earnings.

Earnings & Valuation

This table compares Caterpillar and Douglas Dynamics’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Caterpillar $45.46 billion 2.05 $754.00 million $6.88 22.70
Douglas Dynamics $474.93 million 2.20 $55.32 million $1.36 33.93

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

Volatility & Risk

Caterpillar has a beta of 1.31, suggesting that its stock price is 31% more volatile than the S&P 500. Comparatively, Douglas Dynamics has a beta of 1.2, suggesting that its stock price is 20% more volatile than the S&P 500.

Dividends

Caterpillar pays an annual dividend of $3.12 per share and has a dividend yield of 2.0%. Douglas Dynamics pays an annual dividend of $1.06 per share and has a dividend yield of 2.3%. Caterpillar pays out 45.3% of its earnings in the form of a dividend. Douglas Dynamics pays out 77.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Caterpillar has raised its dividend for 8 consecutive years and Douglas Dynamics has raised its dividend for 5 consecutive years.

Profitability

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

Net Margins Return on Equity Return on Assets
Caterpillar 4.59% 34.38% 6.48%
Douglas Dynamics 11.66% 14.06% 4.99%

Insider and Institutional Ownership

66.9% of Caterpillar shares are owned by institutional investors. Comparatively, 89.6% of Douglas Dynamics shares are owned by institutional investors. 0.4% of Caterpillar shares are owned by company insiders. Comparatively, 3.1% of Douglas Dynamics shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations and price targets for Caterpillar and Douglas Dynamics, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Caterpillar 1 9 15 0 2.56
Douglas Dynamics 0 1 1 0 2.50

Caterpillar currently has a consensus price target of $172.81, indicating a potential upside of 10.63%. Douglas Dynamics has a consensus price target of $47.00, indicating a potential upside of 1.84%. Given Caterpillar’s stronger consensus rating and higher possible upside, analysts clearly believe Caterpillar is more favorable than Douglas Dynamics.

Summary

Caterpillar beats Douglas Dynamics on 11 of the 17 factors compared between the two stocks.

About Caterpillar

Caterpillar Inc. manufactures and sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives for construction, resource, and energy and transportation industries. Its Construction Industries segment offers asphalt pavers, backhoe loaders, compactors, cold planers, compact truck and multi-terrain loaders, forestry excavators, feller bunchers, harvesters, knuckleboom loaders, motorgraders, pipelayers, road reclaimers, site prep tractors, skidders, skid steer loaders, telehandlers, track-type loaders, wheel excavators, and track-type tractors. The company's Resource Industries segment provides electric rope and hydraulic shovels, draglines, track and rotary drills, hard rock vehicles, large track-type vehicles, large mining trucks, longwall miners, large wheel loaders, off-highway trucks, articulated trucks, wheel tractor scrapers, wheel dozers, landfill compactors, soil compactors, machinery components, electronics and control systems, select work tools, and hard rock continuous mining systems. Its Energy & Transportation segment offers reciprocating engine powered generator sets; reciprocating engines; integrated systems used in the electric power generation industry; turbines, centrifugal gas compressors, and related services; integrated systems and solutions for the marine and oil and gas industries; remanufactured reciprocating engines and components; and diesel-electric locomotives and components, and other rail-related products and services. Its All Other operating segments manufactures filters and fluids, undercarriage, tires, rims, ground engaging tools, fluid transfer products, precision seals, and rubber sealing and connecting components; parts distribution; and digital investments services. The company was formerly known as Caterpillar Tractor Co. and changed its name to Caterpillar Inc. in 1986. The company was founded in 1925 and is headquartered in Deerfield, Illinois.

About Douglas Dynamics

Douglas Dynamics, Inc. operates as a manufacturer and up-fitter of commercial work truck attachments and equipment primarily in North America. It operates in 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 and heavy duty trucks, as well as various related parts and accessories. It also provides customized turnkey solutions to governmental agencies, such as departments of transportation and municipalities. This segment offers snow and ice management attachments under the BLIZZARD, FISHER, HENDERSON, SNOWEX, and WESTERN brands; turf care equipment under the TURFEX brand; and industrial maintenance equipment under the SWEEPEX brand. It sells its products to professional snowplowers who are contracted to remove snow and ice from commercial, municipal, and residential areas. The Work Truck Solutions segment provides truck and vehicle up-fits 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 offers up-fit and storage solutions under the DEJANA brand and its related sub-brands. The company was founded in 2004 and is headquartered in Milwaukee, Wisconsin.

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