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Is It Too Late To Consider Buying Douglas Dynamics, Inc. (NYSE:PLOW)?

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Simply Wall St
·3 min read
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While Douglas Dynamics, Inc. (NYSE:PLOW) might not be the most widely known stock at the moment, it led the NYSE gainers with a relatively large price hike in the past couple of weeks. As a small cap stock, which tends to lack high analyst coverage, there is generally more of an opportunity for mispricing as there is less activity to push the stock closer to fair value. Is there still an opportunity here to buy? Let’s take a look at Douglas Dynamics’s outlook and value based on the most recent financial data to see if the opportunity still exists.

See our latest analysis for Douglas Dynamics

What's the opportunity in Douglas Dynamics?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 4.71% above my intrinsic value, which means if you buy Douglas Dynamics today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $40.85, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, Douglas Dynamics’s low beta implies that the stock is less volatile than the wider market.

What does the future of Douglas Dynamics look like?

earnings-and-revenue-growth
earnings-and-revenue-growth

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. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Douglas Dynamics' revenue growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. Unless expenses grow at the same level, or higher, this top-line growth should lead to robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? PLOW’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping tabs on PLOW, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you'd like to know more about Douglas Dynamics as a business, it's important to be aware of any risks it's facing. For instance, we've identified 3 warning signs for Douglas Dynamics (1 doesn't sit too well with us) you should be familiar with.

If you are no longer interested in Douglas Dynamics, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.