Dana Has Nearly Doubled From Its Low, But A Lot Of Panic Is Still In The Price

I’m approaching modeling for companies like Dana (DAN) with roughly the same mindset as dinner at a certain relative’s house – I don’t know exactly what’s in store, but I’m sure it’s not going to be good. Commercial vehicle markets like Class 8 trucks were already going to be weak in 2020, and now it looks as though double-digit declines in auto production are at least plausible, suggesting to me that a low-to-mid teens year-over-year decline in revenue, with meaningful decremental margins, is not an unreasonable expectation for 2020.

What follows is likewise highly uncertain, but it seems like there’s still panic playing into the outlook – I saw one sell-side analyst recently cut expectations for Dana such that the company wouldn’t recover to 2019 revenue levels until 2027 or later, and that just seems implausibly bleak to me. Uncertainty and fear is the order of the day, but I believe Dana’s business can withstand this shock, and I think this is a name to consider for more aggressive investors.

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Dana Has Nearly Doubled From Its Low, But A Lot Of Panic Is Still In The Price