Dana Incorporated Seems Well Positioned to Bring Value to Long-Term Shareholders

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Written By Elizabeth Monroe

Dana Incorporated (NYSE: DAN) has seen its share price drop 72% from its all-time highs, yet there are reasons to believe that the company might be poised for a turnaround. Despite facing challenges, such as supply chain disruptions and high installation costs, Dana’s strategic initiatives and ongoing revenue growth provide a promising outlook.

The company remains a key player in the vehicle servicing industry, offering critical components like axles, transmissions, and drivetrain products. While Dana’s stock has underperformed the broader market, its financial metrics suggest it is significantly undervalued, making it a potential opportunity for patient investors.

Company Overview

Credits: DepositPhotos

Dana Incorporated specializes in providing essential components and systems for various types of vehicles, including commercial vehicles and off-highway equipment. The company’s product portfolio includes axles, transmissions, drivetrain components, and other related products, which are crucial for vehicle operation.

Dana’s extensive product range and strategic focus have positioned it as a significant player in the automotive supply chain.

Financial Performance

Since my last analysis in May 2023, Dana has experienced mixed financial results but generally positive revenue growth. For the fiscal year 2023, the company reported revenue of $10.56 billion, a 3.9% increase from $10.16 billion in 2022. This growth was driven by organic factors, particularly strong demand in Europe, where revenue increased by $491 million, or 16.1%.

However, the company faced challenges in North and South America, with revenue declines due to labor strikes and reduced production levels in light trucks and medium/heavy trucks.

Despite these challenges, Dana improved its profitability, transitioning from a net loss of $242 million in 2022 to a net gain of $38 million in 2023. This improvement was attributed to the absence of significant goodwill impairment charges and lower income tax expenses.

However, operating cash flow decreased from $649 million to $476 million, with adjusted operating cash flow declining from $450 million to $406 million. On a positive note, EBITDA increased from $700 million to $845 million.

Q1 2024 Results

In the first quarter of 2024, Dana reported revenue of $2.74 billion, a 3.4% increase from the same period in 2023. This growth was primarily driven by a 14.1% increase in light vehicle production, particularly in North America. However, net income for the quarter decreased from $28 million to $3 million, primarily due to a $29 million loss on the disposal of certain assets.

Other profitability metrics showed improvement, with operating cash flow rising from negative $170 million to negative $102 million, and adjusted operating cash flow increasing from $134 million to $149 million. EBITDA also expanded from $204 million to $223 million.

2024 Outlook

Management remains optimistic about 2024, projecting revenue between $10.65 billion and $11.15 billion, representing a 3.3% increase at the midpoint. Earnings per share are expected to range between $0.35 and $0.85, with operating cash flow projected between $500 million and $550 million. EBITDA is expected to be between $875 million and $975 million.

The revenue bridge for 2023 to 2024 indicates organic growth from traditional products and electric vehicle sales, despite anticipated declines from divestitures, foreign currency fluctuations, and commodity price changes.


Dana’s valuation metrics indicate that the stock is undervalued. The company trades at a low to mid-single-digit range based on EBITDA and operating cash flow multiples. Compared to similar firms, Dana appears attractively priced.

On a price-to-operating cash flow basis, only one out of five comparable companies was cheaper, while Dana was the cheapest based on the EV to EBITDA ratio.


Credits: DepositPhotos

While Dana Incorporated faces volatility and mixed financial results, its current valuation suggests significant upside potential. The company’s strategic initiatives, such as expanding its product portfolio and focusing on high-demand markets, position it well for future growth.

Despite the stock’s underperformance relative to the broader market, its low valuation and potential for revenue growth make it a compelling investment for patient investors.



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