Snow and ice equipment company Douglas Dynamics (NYSE: PLOW) missed Wall Street’s revenue expectations in Q3 CY2025, but sales rose 25.3% year on year to $162.1 million. On the other hand, the company’s full-year revenue guidance of $647.5 million at the midpoint came in 1.3% above analysts’ estimates. Its non-GAAP profit of $0.40 per share was in line with analysts’ consensus estimates.

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Company Overview

Once manufacturing snowplows designed for the iconic jeep vehicle precursor, Douglas Dynamics (NYSE: PLOW) offers snow and ice equipment for the roads and sidewalks.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Douglas Dynamics grew its sales at a tepid 5% compounded annual growth rate. This was below our standard for the industrials sector and is a poor baseline for our analysis.

Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Douglas Dynamics’s recent performance shows its demand has slowed as its annualized revenue growth of 1.8% over the last two years was below its five-year trend. We also note many other Heavy Transportation Equipment businesses have faced declining sales because of cyclical headwinds. While Douglas Dynamics grew slower than we’d like, it did do better than its peers.

This quarter, Douglas Dynamics generated an excellent 25.3% year-on-year revenue growth rate, but its $162.1 million of revenue fell short of Wall Street’s high expectations.

Looking ahead, sell-side analysts expect revenue to grow 9.9% over the next 12 months, an improvement versus the last two years. This projection is commendable and indicates its newer products and services will catalyze better top-line performance.

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Operating Margin

Douglas Dynamics has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 9.8%, higher than the broader industrials sector.

Looking at the trend in its profitability, Douglas Dynamics’s operating margin decreased by 1.4 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

In Q3, Douglas Dynamics generated an operating margin profit margin of 8.7%, up 5.9 percentage points year on year. The increase was solid, and because its operating margin rose more than its gross margin, we can infer it was more efficient with expenses such as marketing, R&D, and administrative overhead.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Douglas Dynamics’s EPS grew at a remarkable 12.3% compounded annual growth rate over the last five years, higher than its 5% annualized revenue growth. However, we take this with a grain of salt because its operating margin didn’t improve and it didn’t repurchase its shares, meaning the delta came from reduced interest expenses or taxes.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Douglas Dynamics, its two-year annual EPS growth of 23.2% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q3, Douglas Dynamics reported adjusted EPS of $0.40, up from $0.24 in the same quarter last year. This print beat analysts’ estimates by 1.7%. Over the next 12 months, Wall Street expects Douglas Dynamics’s full-year EPS of $2.02 to grow 9.7%.

Key Takeaways from Douglas Dynamics’s Q3 Results

We were impressed by how significantly Douglas Dynamics blew past analysts’ EBITDA expectations this quarter. We were also glad its full-year EBITDA guidance slightly exceeded Wall Street’s estimates. On the other hand, its revenue slightly missed. Overall, we think this was a mixed quarter. Investors were likely hoping for more, and shares traded down 1.8% to $29.10 immediately following the results.

So do we think Douglas Dynamics is an attractive buy at the current price? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.