On Wednesday, CFRA raised the price target for Dana Holding (NYSE: NYSE:DAN) to $14 from $12, while keeping a Hold rating on the stock. The new target is based on a forward price-to-earnings (P/E) ratio of 10.0x for the year 2025, which is a discount compared to Dana's 10-year average forward P/E of 13.9x.
This adjustment follows the company's recent financial performance, which included a second-quarter adjusted earnings per share (EPS) of $0.31, surpassing the consensus estimate of $0.26.
The increase in Dana's EPS was attributed to better-than-expected margins, despite a slight 0.4% drop in revenue to $2.74 billion, which was $30 million below the consensus. The company managed to expand its adjusted EBITDA margin by 10 basis points to 8.9%, which was 20 basis points higher than the consensus.
This margin expansion indicates cost control and production efficiency improvements by Dana's management.
Furthermore, Dana has updated its 2024 guidance for net sales and EPS. The company now expects net sales to be between $10.45 billion and $10.95 billion and EPS to range from $0.80 to $1.30.
The revised forecast is an increase from the previous guidance of $10.65 billion to $11.15 billion in net sales and $0.35 to $0.85 in EPS. The updated guidance is also more optimistic compared to the current consensus of $10.83 billion in net sales and $0.89 in EPS.
In other recent news, Dana Incorporated declared a quarterly dividend of $0.10 per share, showcasing its financial health and commitment to shareholder returns. The company reported a notable increase in first-quarter sales for 2024, reaching $2.7 billion, a $91 million rise from the same period last year. Dana's adjusted EBITDA also increased to $223 million, despite a challenging business environment, and its free cash flow outlook for the full year was improved to $75 million.
Further, Dana Incorporated announced leadership changes with Brian Pour appointed as Senior Vice President and President of Dana Commercial Vehicle Drive and Motion Systems, and the promotion of Lisa Amend to Senior Vice President and Chief Human Resources Officer. These appointments are part of Dana's ongoing efforts to manage its global operations effectively.
Lastly, Dana's power technologies segment, particularly the EV business and BEV3 program, is performing strongly. However, the net income attributable to Dana decreased to $3 million, down from $28 million the previous year due to divestiture.
InvestingPro Insights
Dana Holding's financial resilience is reflected in its current market capitalization of $1.93 billion and a noteworthy dividend yield of 3.4%, showcasing the company's commitment to returning value to shareholders with 13 years of consistent dividend payments. This dedication to shareholder returns is complemented by the company's solid liquidity position, as its liquid assets comfortably cover short-term obligations.
InvestingPro Tips highlight that while analysts have tempered their earnings expectations for Dana, with four analysts revising their earnings downwards for the upcoming period, the company is still expected to remain profitable this year. This is underscored by the company's positive net income over the last twelve months. However, potential investors should be aware of Dana's high earnings multiple, with a P/E ratio of 146.44, which indicates a premium valuation relative to near-term earnings growth. Additionally, the stock has been trading near its 52-week low, which could present a buying opportunity for those who believe in the company's fundamentals and long-term prospects.
For those interested in a deeper analysis, there are over 10 additional InvestingPro Tips available for Dana Holding, providing further insights into the company's performance and valuation metrics. These tips are part of the comprehensive tools and data provided by InvestingPro, which can be accessed for Dana Holding at https://www.investing.com/pro/DAN.
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