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Dana: Margin Gains Are Real, but the Eaton Deal Now Decides the Upside

Writer: Brigette Mwaura
Brigette Mwaura
1 day ago
10 min read

Summary

  • I am downgrading Dana's rating from a STRONG BUY to a BUY. For Q2 Dana delivered sales of $2.01Bn, adjusted EBITDA of $207Mn and a 10.3% adjusted EBITDA margin. Revenue rose 4% and the margin expanded 270 basis points y/y. 


  • The operating thesis strengthened. Gross margin reached 10.4%, the three-year net-new-business backlog increased to $950Mn, and full-year adjusted EBITDA and free-cash-flow guidance moved higher. 


  • Unfortunately, the per-share thesis weakened. Full-year adjusted EPS guidance fell to $1.75 to $2.25, and the planned Eaton Mobility combination makes transaction execution the main source of upside and risk.

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DANA logo above a gray axle assembly on a light blue background, suggesting industrial machinery or automotive parts.
Source: DANA Q226 Presentation

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