Douglas Dynamics (NYSE:PLOW) and Westinghouse Air Brake Technologies (NYSE:WAB) are both auto/tires/trucks companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, valuation, profitability, institutional ownership, analyst recommendations, dividends and risk.
Risk and Volatility
Douglas Dynamics has a beta of 0.87, indicating that its share price is 13% less volatile than the S&P 500. Comparatively, Westinghouse Air Brake Technologies has a beta of 1.53, indicating that its share price is 53% more volatile than the S&P 500.
Dividends
Douglas Dynamics pays an annual dividend of $1.14 per share and has a dividend yield of 2.4%. Westinghouse Air Brake Technologies pays an annual dividend of $0.48 per share and has a dividend yield of 0.6%. Douglas Dynamics pays out 49.4% of its earnings in the form of a dividend. Westinghouse Air Brake Technologies pays out 11.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Douglas Dynamics has raised its dividend for 1 consecutive years and Westinghouse Air Brake Technologies has raised its dividend for 1 consecutive years.
Insider and Institutional Ownership
90.9% of Douglas Dynamics shares are owned by institutional investors. Comparatively, 88.1% of Westinghouse Air Brake Technologies shares are owned by institutional investors. 2.3% of Douglas Dynamics shares are owned by company insiders. Comparatively, 5.4% of Westinghouse Air Brake Technologies shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Analyst Recommendations
This is a summary of current ratings for Douglas Dynamics and Westinghouse Air Brake Technologies, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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Douglas Dynamics | 0 | 1 | 2 | 0 | 2.67 |
Westinghouse Air Brake Technologies | 0 | 2 | 5 | 0 | 2.71 |
Douglas Dynamics currently has a consensus target price of $47.00, indicating a potential upside of 0.11%. Westinghouse Air Brake Technologies has a consensus target price of $83.3333, indicating a potential upside of 3.35%. Given Westinghouse Air Brake Technologies' stronger consensus rating and higher possible upside, analysts plainly believe Westinghouse Air Brake Technologies is more favorable than Douglas Dynamics.
Valuation & Earnings
This table compares Douglas Dynamics and Westinghouse Air Brake Technologies' revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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Douglas Dynamics | $571.71 million | 1.88 | $49.17 million | $2.31 | 20.33 |
Westinghouse Air Brake Technologies | $8.20 billion | 1.87 | $326.70 million | $4.17 | 19.37 |
Westinghouse Air Brake Technologies has higher revenue and earnings than Douglas Dynamics. Westinghouse Air Brake Technologies is trading at a lower price-to-earnings ratio than Douglas Dynamics, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Douglas Dynamics and Westinghouse Air Brake Technologies' net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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Douglas Dynamics | -19.32% | 9.82% | 3.70% |
Westinghouse Air Brake Technologies | 5.29% | 7.60% | 3.99% |
Summary
Westinghouse Air Brake Technologies beats Douglas Dynamics on 12 of the 16 factors compared between the two stocks.