With a daily loss of 7.37%, a 3-month loss of 38.1%, and a Loss Per Share of 0.72, Dana Inc (DAN, Financial) appears to be significantly undervalued. This article aims to provide an in-depth analysis of Dana's valuation, inviting readers to delve into the financial intricacies of this global propulsion and energy-management solutions provider.
Company Overview
Dana Inc is a global leader in designing and manufacturing efficient propulsion and energy-management solutions for all mobility markets. The company's portfolio enhances the efficiency, performance, and sustainability of light vehicles, commercial vehicles, and off-highway equipment. Dana operates in four reportable segments, with the Light Vehicle Drive Systems segment generating the maximum revenue. Despite a current stock price of $11.69, the GF Value of Dana is estimated at $20.71, suggesting significant undervaluation.
Understanding GF Value
The GF Value is an exclusive GuruFocus calculation representing a stock's intrinsic value. It is based on historical trading multiples, a GuruFocus adjustment factor reflecting past returns and growth, and future business performance estimates. If a stock price significantly deviates from the GF Value Line, it indicates overvaluation or undervaluation, which can predict future returns.
Based on this measure, Dana (DAN, Financial) seems significantly undervalued. With a market cap of $1.70 billion, the stock's current price is substantially below the GF Value Line, suggesting a higher likelihood of future returns. As such, the long-term return of Dana's stock is likely to exceed its business growth.
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Dana's Financial Strength and Profitability
Investing in companies with robust financial strength minimizes the risk of permanent loss. Dana's cash-to-debt ratio of 0.16 is lower than 79.45% of 1231 companies in the Vehicles & Parts industry, indicating fair financial strength.
Consistent profitability over the years reduces investment risk. Dana has been profitable eight out of the past ten years, with a revenue of $10.60 billion and a Loss Per Share of $0.72 in the past twelve months. Its operating margin of 3.49% ranks lower than 60.51% of 1266 companies in the Vehicles & Parts industry, indicating fair profitability.
Growth Prospects
Growth is a crucial factor in a company's valuation. Dana's 3-year average revenue growth rate surpasses 50.66% of 1206 companies in the Vehicles & Parts industry. However, its 3-year average EBITDA growth rate of -8.1% ranks lower than 77.69% of companies in the same industry.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) is a reliable profitability indicator. When ROIC exceeds WACC, it signifies value creation for shareholders. Dana's ROIC for the past 12 months is -39.9, while its WACC is 6.9, indicating a need for improvement.
Conclusion
In conclusion, Dana's stock appears significantly undervalued. Although the company's financial condition and profitability are fair, its growth ranks lower than 77.69% of 1080 companies in the Vehicles & Parts industry. To learn more about Dana's stock, check out its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
