Financial Contrast: Freightcar America (NASDAQ:RAIL) versus Douglas Dynamics (NYSE:PLOW)

Freightcar America (NASDAQ:RAIL) and Douglas Dynamics (NYSE:PLOW) are both small-cap industrials companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, profitability, dividends, valuation, analyst recommendations and earnings.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Freightcar America	-2.69%	-15.23%	2.90%
Douglas Dynamics	7.52%	19.03%	8.07%

Volatility and Risk

Freightcar America has a beta of 1.46, suggesting that its stock price is 46% more volatile than the S&P 500. Comparatively, Douglas Dynamics has a beta of 1.19, suggesting that its stock price is 19% more volatile than the S&P 500.

Institutional & Insider Ownership

32.0% of Freightcar America shares are held by institutional investors. Comparatively, 91.8% of Douglas Dynamics shares are held by institutional investors. 29.2% of Freightcar America shares are held by insiders. Comparatively, 1.5% of Douglas Dynamics shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Freightcar America and Douglas Dynamics, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Freightcar America	1	1	0	0	1.50
Douglas Dynamics	0	2	2	1	2.80

Douglas Dynamics has a consensus price target of $51.67, suggesting a potential upside of 22.55%. Given Douglas Dynamics’ stronger consensus rating and higher possible upside, analysts plainly believe Douglas Dynamics is more favorable than Freightcar America.

Valuation & Earnings

This table compares Freightcar America and Douglas Dynamics”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Freightcar America	$500.99 million	0.46	$38.10 million	($0.54)	-13.15
Douglas Dynamics	$656.05 million	1.48	$46.90 million	$2.20	19.16

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

Summary

Douglas Dynamics beats Freightcar America on 13 of the 15 factors compared between the two stocks.

About Freightcar America

FreightCar America, Inc., through its subsidiaries, engages in design, manufacture, and sale of railcars and railcar components for the transportation of bulk commodities and containerized freight products in the United States and Mexico. It operates in two segments, Manufacturing and Parts. The company offers a range of railcars, including open top hoppers, mill gondola cars, intermodal and non-intermodal flat cars, coal cars; bulk commodity cars covered hopper cars, coil steel cars, boxcars, woodchip hoppers, aluminum vehicle carriers, and articulated bulk container railcars. It also sells used railcars; rebuilds, converts, and leases railcars; and sells forged, cast, and fabricated parts for various railcars. The company's customers primarily include shippers, railroads, and financial institutions. FreightCar America, Inc. was founded in 1901 and is headquartered in Chicago, Illinois.

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.