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Douglas Dynamics, Inc. (NYSE:PLOW), might not be a large cap stock, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$28.81 and falling to the lows of US$22.65. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Douglas Dynamics' current trading price of US$24.57 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Douglas Dynamics’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for Douglas Dynamics
Is Douglas Dynamics Still Cheap?
According to our valuation model, Douglas Dynamics seems to be fairly priced at around 14.28% above our intrinsic value, which means if you buy Douglas Dynamics today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $21.50, there’s only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since Douglas Dynamics’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from Douglas Dynamics?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Douglas Dynamics, it is expected to deliver a negative earnings growth of -6.8%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What This Means For You
Are you a shareholder? Currently, PLOW appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to de-risk your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on PLOW for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help crystalize your views on PLOW should the price fluctuate below its true value.