Critical Review: Douglas Dynamics (NYSE:PLOW) vs. Parker-Hannifin (NYSE:PH)

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

Profitability

This table compares Douglas Dynamics and Parker-Hannifin’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Douglas Dynamics	7.52%	19.03%	8.07%
Parker-Hannifin	16.97%	28.48%	13.49%

Earnings & Valuation

This table compares Douglas Dynamics and Parker-Hannifin”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Douglas Dynamics	$656.05 million	1.40	$46.90 million	$2.20	18.12
Parker-Hannifin	$21.50 billion	5.60	$3.65 billion	$28.49	33.50

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

Volatility & Risk

Douglas Dynamics has a beta of 1.18, suggesting that its stock price is 18% more volatile than the S&P 500. Comparatively, Parker-Hannifin has a beta of 1.12, suggesting that its stock price is 12% more volatile than the S&P 500.

Dividends

Douglas Dynamics pays an annual dividend of $1.18 per share and has a dividend yield of 3.0%. Parker-Hannifin pays an annual dividend of $8.00 per share and has a dividend yield of 0.8%. Douglas Dynamics pays out 53.6% of its earnings in the form of a dividend. Parker-Hannifin pays out 28.1% 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. Parker-Hannifin has raised its dividend for 70 consecutive years.

Analyst Ratings

This is a summary of recent recommendations for Douglas Dynamics and Parker-Hannifin, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Douglas Dynamics	0	2	2	1	2.80
Parker-Hannifin	0	5	18	0	2.78

Douglas Dynamics presently has a consensus target price of $51.67, suggesting a potential upside of 29.57%. Parker-Hannifin has a consensus target price of $1,158.65, suggesting a potential upside of 21.42%. Given Douglas Dynamics’ stronger consensus rating and higher probable upside, equities analysts plainly believe Douglas Dynamics is more favorable than Parker-Hannifin.

Institutional & Insider Ownership

91.8% of Douglas Dynamics shares are owned by institutional investors. Comparatively, 82.4% of Parker-Hannifin shares are owned by institutional investors. 1.5% of Douglas Dynamics shares are owned by insiders. Comparatively, 0.3% of Parker-Hannifin shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Parker-Hannifin beats Douglas Dynamics on 11 of the 18 factors compared between the two stocks.

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.

About Parker-Hannifin

Parker-Hannifin Corporation manufactures and sells motion and control technologies and systems for various mobile, industrial, and aerospace markets worldwide. The company operates through two segments: Diversified Industrial and Aerospace Systems. The Diversified Industrial segment offers sealing, shielding, thermal products and systems, adhesives, coatings, and noise vibration and harshness solutions; filters, systems, and diagnostics solutions to ensure purity and remove contaminants from fuel, air, oil, water, and other liquids and gases; connectors used in fluid and gas handling; and hydraulic, pneumatic, and electromechanical components and systems for builders and users of mobile and industrial machinery and equipment. This segment sells its products to original equipment manufacturers (OEMs) and distributors who serve the replacement markets in manufacturing, packaging, processing, transportation, construction, refrigeration and air conditioning, agricultural, and military machinery and equipment industries. The Aerospace Systems segment offers products for use in commercial and military airframe and engine programs, such as control actuation systems and components, engine build-up ducting, engine exhaust nozzles and assemblies, engine systems and components, fluid conveyance systems and components, fuel systems and components, fuel tank inerting systems, hydraulic systems and components, lubrication components, avionics, sensors, pneumatic control components, thermal management products, fire detection and suppression systems and components, and wheels and brakes, as well as fluid metering, delivery, and atomization devices. This segment markets its products directly to OEMs and end users. The company markets its products through direct-sales employees, independent distributors, and sales representatives. Parker-Hannifin Corporation was founded in 1917 and is headquartered in Cleveland, Ohio.