Summary
Dana Incorporated is showing signs of a strong turnaround following the painful 2020 fiscal year.
Cash flows are robust and the company’s prospects, for the foreseeable future, should be positive.
Add in the fact that shares appear cheap and it should make a great prospect for value-oriented investors.
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welcomia/iStock via Getty Images In the modern era, vehicles and other forms of machinery have a significant impact on our daily lives and on the functioning of our economies. Without them, we would be living much the way that our ancestors did for the past couple hundred thousand years. So naturally, it stands to reason that there would be a large and vibrant market aimed at providing various products and services for these vehicles and other types of machinery. One interesting prospect in this space is a firm called Dana Incorporated ( DAN ). Prior to the COVID-19 pandemic, the company exhibited attractive growth on its top line and when it came to cash flow. 2020 proved to be a bit painful for the enterprise, but growth has resumed through the 2021 fiscal year. On top of this, shares of the business look to be attractively priced, even if we anticipate a return back to pre-pandemic levels. So for these reasons, it should make for a great prospect for long term, value oriented investors. Taking Dana for a test drive
Dana operates today as a provider of power conveyance and energy management solutions for vehicles and other types of machinery. In particular, the company services light vehicles, commercial vehicles, and various off highway equipment. Not only does it provide the products necessary to enable the propulsion of conventional vehicles, it also provides the same for hybrid and electric powered vehicles. On top of all of this, the company also services the stationary industrial market in some ways. It does all of this through the 141 large facilities that it operates across the world, spread between 33 different countries in all.
At this time, Dana operates in four different segments. The largest of these is called Light Vehicle. According to management, products sold under this segment includes things like axles, transmissions, drivetrain components, and more. It services many of the major automobile companies through this segment, working to provide products for their light trucks, sport utility vehicles, passenger cars, and more. According to management, this particular segment, in the company’s 2020 fiscal year, accounted for 42.8% of the firm’s overall sales. The next segment the warrants our attention is the Commercial Vehicle segment. Through this segment, the company provides many of the same products as it does for the Light Vehicle segment, only with a change in focus to medium duty trucks, heavy duty trucks, buses, and various specialty vehicles. This particular segment was responsible for 16.6% of the company’s overall sales in 2020.
The second largest segment that Dana operates today is called Off-Highway. As its name suggests, the Off-Highway segment focuses on large machinery like construction equipment, agricultural equipment, mining and forestry equipment, material handling equipment, and more. It, too, focuses on many of the same products that the other aforementioned segments sell. Based on the data provided, this segment made up 27.7% of the company’s sales last year. The last key segment that we should pay attention to is the Power Technologies segment. Through this segment, the company provides products like gaskets, cover modules, heat Shields, engine sealing systems, cooling technologies, heat transfer products, and more. These products are for the light vehicle and the heavy and medium vehicle and off-highway markets. Management said that this segment accounted for 12.9% of revenue in 2020.
In the years leading up to the COVID-19 pandemic, Dana was successful in growing its operation at a nice clip. Sales increased from $5.83 billion in 2016 to $8.62 billion in 2019. But then, in 2020, revenue dropped by 17.6%, falling to just $7.11 billion for the year. Fortunately for investors, this downturn was short term in nature. For the first nine months of the company’s 2021 fiscal year, sales came in at $6.67 billion. That is 33.5% higher than the roughly $5 billion the company generated the same time one year earlier. Although performance improvements, acquisitions, and foreign currency fluctuations had a positive impact on the company’s top line, the bulk of the increase in revenue came from a mixture […]
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