On Tuesday, Dana Holding Corporation (NYSE:DAN) stock received an upgrade in its rating from CFRA, moving from Sell to Hold, with an increased price target of $12.00, up from the previous $10.00. The adjustment comes after the company reported a stronger-than-anticipated first-quarter performance.
Dana Holding posted a quarterly adjusted earnings per share (EPS) of $0.27, which is an 8% increase from the $0.25 reported in the same period last year, surpassing the consensus estimate of $0.18.
This earnings beat was attributed to higher sales and improved margins. The company's revenue climbed 4% to $2.74 billion, which was $40 million more than the consensus forecast. Additionally, Dana's adjusted EBITDA margin grew by 50 basis points to 8.2%, exceeding the consensus by 20 basis points.
Despite the positive quarter, the reported EPS included a charge of $0.25 per share related to certain assets held for sale. Nonetheless, Dana Holding has reaffirmed its guidance for 2024, expecting net sales to be between $10.65 billion and $11.15 billion and EPS to range from $0.35 to $0.85. These projections stand against the current consensus estimates of $10.89 billion in net sales and $0.91 in EPS.
CFRA's upgrade reflects the anticipated acceleration in earnings growth by 2025, which is expected to alleviate some investor concerns about the company's story. Although Dana's balance sheet remains overleveraged, and the projected free cash flow of $50 million to $100 million for 2024 is not likely to significantly aid in debt reduction, the forecasted earnings growth for 2025 provides a more optimistic outlook for the company's financial health.
InvestingPro Insights
Following the recent upgrade by CFRA, investors may find additional context through InvestingPro data and tips for Dana Holding Corporation (NYSE:DAN). According to InvestingPro, the company operates with a significant debt burden, which is a critical factor to consider given the company's reaffirmed guidance for 2024. It's noteworthy that analysts have revised their earnings downwards for the upcoming period, indicating a cautious outlook on Dana's future performance. However, the company's net income is expected to grow this year, providing a glimmer of hope for potential investors.
From a valuation perspective, Dana Holding is trading at a P/E ratio of 47.91, which adjusts to a more modest 32.57 when considering the last twelve months as of Q4 2023. This is coupled with a PEG ratio of 0.42, suggesting that the company's earnings growth could be undervalued relative to its peers. On the profitability front, Dana has maintained dividend payments for 13 consecutive years, with a dividend yield of 3.17%, reflecting a commitment to shareholder returns despite the financial challenges.
With a market capitalization of $1.78 billion, Dana's revenue growth over the last twelve months stood at 3.93%, while the most recent quarterly growth experienced a slight decline of 2.39%. The company's gross profit margin remains under pressure at 8.53%, which underscores the importance of the improved margins mentioned in their first-quarter performance.
For those seeking further insights, there are additional InvestingPro Tips available for Dana Holding Corporation, which can be accessed through the dedicated link: https://www.investing.com/pro/DAN. Readers interested in a deeper financial analysis might consider taking advantage of the special offer using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, which includes access to a comprehensive list of InvestingPro Tips.
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