Up another 25% from my last write-up on the company, I still believe Dana (DAN)
has more upside from here. Not only is Dana leveraged to recoveries in
autos, trucks, and other commercial vehicles, but the company's
surprisingly strong decremental margins so far lends a lot of
credibility to management's past comments about the resilience of its
margin and cash flow structure. Further down the road, Dana has a
portfolio of electrification technologies that should enable it to
preserve its business as manufacturers and customers shift to electric
powertrains.
Low single-digit revenue growth and
low-to-mid single-digit FCF margins can support a fair value in the high
teens, though the near-term margin-driven EV/revenue fair value is more
in the mid-teens. Either way, I think these shares offer appealing
potential here even with the risk of a protracted downturn in the
company's major markets.
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Dana Still Worth A Look On Better Decrementals And Recovery Potential
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