- If you are wondering whether Dana's current share price lines up with its underlying worth, this is a good moment to step back and look closely at what you are actually paying for.
- Dana's stock last closed at US$34.84, with returns of 4.3% over the past week, 12.4% over the past month, 39.6% year to date, 132.1% over 1 year and 140.1% over 3 years, compared with 62.2% over 5 years.
- Recent pricing moves are being assessed in light of ongoing attention on the auto parts and driveline sector, along with continuing interest in how companies such as Dana are positioned across traditional and newer mobility technologies. In that context, many investors are looking past short term sentiment and focusing more on what they are getting for each dollar invested.
- On our simple 6 point valuation check framework, Dana currently scores 2 out of 6. Next we look at what that means across different valuation approaches, before finishing with a more complete way to think about value than any single model on its own.
Dana scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: Dana Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model estimates what a business might be worth by projecting its future cash flows and discounting them back to today in dollar terms.
For Dana, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is reported at $5.29 million, while analyst based and extrapolated projections point to free cash flow of $441.7 million by 2030. Simply Wall St provides detailed annual projections out to 2035, with values discounted to reflect the time value of money.
When these projected cash flows are summed and discounted, the model arrives at an estimated intrinsic value of around $51.88 per share. Compared with the recent share price of $34.84, this DCF output suggests the stock is trading at a 32.8% discount to that estimate, which in this model classifies it as undervalued on this measure.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Dana is undervalued by 32.8%. Track this in your watchlist or portfolio, or discover 56 more high quality undervalued stocks.
Approach 2: Dana Price vs Earnings
For profitable companies, the P/E ratio is a useful way to think about value because it connects what you pay today with the earnings the business is already generating. A higher P/E can sometimes be justified by stronger expected earnings growth or lower perceived risk, while a lower P/E can reflect lower growth expectations or higher risk.
Dana currently trades on a P/E of 60.19x. This sits well above the Auto Components industry average of 20.78x and also above the peer group average of 19.45x. On those simple comparisons alone, the stock looks expensive relative to many listed peers in the same space.
Simply Wall St also provides a proprietary “Fair Ratio” for Dana of 26.08x. This is an estimate of what a reasonable P/E might be, after considering factors such as earnings growth profile, industry, profit margins, market capitalization and company specific risks. Because it pulls those elements together in one number, the Fair Ratio can be more informative than a straight comparison with industry or peer averages that do not adjust for those differences.
Set against this Fair Ratio, Dana’s current P/E of 60.19x comes across as high, which on this measure points to the shares being overvalued.
Result: OVERVALUED
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Upgrade Your Decision Making: Choose your Dana Narrative
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. These are simply your story about Dana tied to your own assumptions for future revenue, earnings and margins, then translated into a fair value that you can compare with today’s share price.
On Simply Wall St’s Community page, Narratives are an easy tool used by millions of investors. You set your view of Dana’s future, the platform turns that into a forecast and a fair value, and you can then see whether your fair value suggests the stock is priced attractively or not at current levels.
These Narratives update automatically when fresh information such as earnings guidance, news about Dana’s electrification programs or analyst targets comes through. Your fair value view keeps moving with the story rather than staying frozen at one point in time.
For example, one investor might build a Narrative around the US$33.43 fair value estimate and see current pricing as close to their own fair value. Another could lean toward the more cautious US$18.00 analyst target, and the gap between those two views highlights how different assumptions about Dana’s future can reasonably lead to very different decisions on whether the price looks appealing or not.
Do you think there's more to the story for Dana? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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