Dana Slogging Through Some End-Market Challenges, But The Longer-Term Outlook Is Better

While I’ve thought Dana (DAN) shares looked undervalued, I also thought that the choppy trends in many of the company’s end-markets, including heavy-duty trucks and off-road vehicles, would add volatility to these shares. Since my last update, the shares have traded over $20 and below $12, and while the company’s capabilities in electrification are getting more recognition, the outlook for 2019 is still dicey and management has been cutting back guidance.

Dana isn’t a good name for nervous investors, but I see a lot of value here. I think the Street may be overestimating the negative impact of lower Class 8 truck builds in 2020, and likewise may be underestimating the potential uplift of electrification in busses and medium-duty trucks in the relatively near future. Although Dana isn’t my favorite auto/truck supplier in terms of pure quality, the valuation is hard to ignore.

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Dana Slogging Through Some End-Market Challenges, But The Longer-Term Outlook Is Better