Dana (DAN) Poised to Move Higher Under Strong Leadership, Demand - Barron's
Dana Holding (NYSE: DAN) shares are looking strong Monday morning following positive comments made by Barron's over the weekend.
With Dana emerging from bankruptcy in 2008 and going through three CEOs in as many year, the company might have finally found its footing. Tapping Borg Warner (NYSE: BWA) vet Roger Wood for the CEO role has proved beneficial for Dana, Barron's noted, as Wood has somewhat of a reputation to keep margins firm. Wood was appointed Dana CEO in March 2011.
So far at Dana, Wood has shifted the company's strategy to focus more on product lines with higher margins, has negotiated better contracts for North American trucks, and boosted prices by an average of 10 percent to 15 percent, Barron's said.
For 2011, expectations for Dana are high. Expected to report next week, Dana should have revenue growth of 25 percent to $7.6 billion and earnings doubled to $1.60 per share. And the stock currently looks like a value at just 7.5 times the high estimate of $2.05 for 2011 EPS.
Though 25 percent of Dana's top-line comes from Europe, Wood is confident sales will remain firm. Leading the trend will be the new Spicer Diamond drive shaft line, which reduces weight by 100 pounds or more (depending on which model is chosen), leading to better fuel economy for trucks. With energy costs expected to keep rising, this will be one area of interest for many operators no matter which continent they're on.
Cash flow at Dana is strong and growing. Barron's pointed out Dana said it expects $200 million in cash flow of 2012 before contributions to its pension plan are made. The balance sheet has about $851 million in cash and $839 million in long-term debt, according to its third-quarter balance sheet.
Another factor for Dana -- which gets 42 percent of revs from light vehicles, 38 percent from medium trucks, and 20 percent from off-highway markets -- is the average age of autos on the road in the U.S. Currently, the average age is about 10 years or more, leading to an increased demand in car replacement.
Shares are up nearly 5 percent early Monday.
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With Dana emerging from bankruptcy in 2008 and going through three CEOs in as many year, the company might have finally found its footing. Tapping Borg Warner (NYSE: BWA) vet Roger Wood for the CEO role has proved beneficial for Dana, Barron's noted, as Wood has somewhat of a reputation to keep margins firm. Wood was appointed Dana CEO in March 2011.
So far at Dana, Wood has shifted the company's strategy to focus more on product lines with higher margins, has negotiated better contracts for North American trucks, and boosted prices by an average of 10 percent to 15 percent, Barron's said.
For 2011, expectations for Dana are high. Expected to report next week, Dana should have revenue growth of 25 percent to $7.6 billion and earnings doubled to $1.60 per share. And the stock currently looks like a value at just 7.5 times the high estimate of $2.05 for 2011 EPS.
Though 25 percent of Dana's top-line comes from Europe, Wood is confident sales will remain firm. Leading the trend will be the new Spicer Diamond drive shaft line, which reduces weight by 100 pounds or more (depending on which model is chosen), leading to better fuel economy for trucks. With energy costs expected to keep rising, this will be one area of interest for many operators no matter which continent they're on.
Cash flow at Dana is strong and growing. Barron's pointed out Dana said it expects $200 million in cash flow of 2012 before contributions to its pension plan are made. The balance sheet has about $851 million in cash and $839 million in long-term debt, according to its third-quarter balance sheet.
Another factor for Dana -- which gets 42 percent of revs from light vehicles, 38 percent from medium trucks, and 20 percent from off-highway markets -- is the average age of autos on the road in the U.S. Currently, the average age is about 10 years or more, leading to an increased demand in car replacement.
Shares are up nearly 5 percent early Monday.
Get immediate access to market moving news and alerts with StreetInsider.com Premium - FREE TRIAL!
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