Melrose Industries (OTCMKTS:MLSPF) and Douglas Dynamics (NYSE:PLOW) Critical Analysis

Douglas Dynamics (NYSE:PLOW) and Melrose Industries (OTCMKTS:MLSPF) are both industrials companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, risk, dividends, analyst recommendations, profitability, institutional ownership and earnings.

Dividends

Douglas Dynamics pays an annual dividend of $1.18 per share and has a dividend yield of 2.6%. Melrose Industries pays an annual dividend of $0.08 per share and has a dividend yield of 1.2%. Douglas Dynamics pays out 53.2% of its earnings in the form of a dividend. Melrose Industries pays out 15.6% 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.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Douglas Dynamics and Melrose Industries, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Douglas Dynamics	0	3	1	1	2.60
Melrose Industries	1	1	2	0	2.25

Douglas Dynamics presently has a consensus price target of $51.67, suggesting a potential upside of 13.24%. Given Douglas Dynamics’ stronger consensus rating and higher possible upside, research analysts clearly believe Douglas Dynamics is more favorable than Melrose Industries.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Douglas Dynamics	7.52%	19.39%	8.31%
Melrose Industries	N/A	N/A	N/A

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Douglas Dynamics	$656.05 million	1.61	$46.90 million	$2.22	20.55
Melrose Industries	N/A	N/A	N/A	$0.53	12.78

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

Institutional & Insider Ownership

91.8% of Douglas Dynamics shares are owned by institutional investors. Comparatively, 47.0% of Melrose Industries shares are owned by institutional investors. 1.5% of Douglas Dynamics shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Douglas Dynamics beats Melrose Industries on 12 of the 14 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 Melrose Industries

Melrose Industries PLC, together with its subsidiaries, provides aerospace components and systems to civil and defence markets in the United Kingdom, rest of Europe, North America, and internationally. The company operates through two segments, Engines and Structures. The Engines segment offers structural engineered components; parts repair; and commercial and aftermarket contracts to engines original equipment manufacturers. The Structures segment provides civil and defence air frames, including lightweight composite and metallic structures; and electrical distribution systems and components to airframe original equipment manufacturers. The company was formerly known as New Melrose Industries PLC and changed its name to Melrose Industries PLC in November 2015. Melrose Industries PLC was founded in 2003 and is headquartered in London, the United Kingdom.