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Dana Starting To Deliver On Its EV Opportunities, And The Street Has Noticed

Mar. 05, 2021 2:49 PM ETDana Incorporated (DAN)BWA, MBGYY, GM, OSK, VLEEY
Stephen Simpson profile picture
Stephen Simpson


  • Dana has announced multiple commercial vehicle EV awards, including projects with Daimler and Oshkosh that will launch this year.
  • The auto chip shortage is unlikely to hurt Dana much, as OEMs are prioritizing chip supplies toward higher-margin pickups and SUVs, which is Dana's passenger vehicle focus.
  • Stronger awards (particularly in content per vehicle) lead me to more robust revenue growth assumptions, and Dana's opportunity in commercial/off-road is particularly attractive (less risk of OEM insourcing).
  • Dana shares still have upside toward $30 and high-single-digit long-term total return potential.

With the company finally getting credit for its leverage to EV opportunities in passenger vehicles, commercial trucks, and off-road machinery, Dana (NYSE:DAN) has done quite well since my last update, rising about 65%. With a growing backlog and outperform on content-per-vehicle growth in EV projects, I believe Dana’s story is getting stronger.

Even after a strong run I still like these shares. While I might lean more strongly toward BorgWarner (BWA) or Valeo (OTCPK:VLEEY) just on the basis of relative valuation, I like Dana’s broad vehicle exposure, particularly as there is less risk of OEM insourcing electric powertrains on the CV/off-highway side. Moreover, pickups and SUVs remain high-priority profit centers for auto OEMs, and a strong market for Dana.

Given all of the above, I think Dana can trade toward $30 over the near term and still offers a high single-digit long-term total annualized potential return.

EV Investments Bearing Fruit

Like BorgWarner, Dana has made a series of acquisitions to develop its hybrid/EV business opportunity, adding technology in high-voltage components (inverters and controllers), drives/axles, low-voltage components, and BEV controls and software, while also reinvesting in its own core assets (like the Spicer axles) to develop a broad suite of solutions for passenger vehicle, commercial vehicle (or CV), and off-highway machinery customers.

And those investments are starting to pay off.

While the recently-released ’21-’23 backlog was flat with the prior release, the 3-year backlog is now 50% EV, with an overall content per vehicle of more than double the company’s experience with internal combustion engine (or ICE) vehicle projects; in fact, some of the CV wins are coming in at 4x content.

In addition to winning the hybrid driveline for the Jeep Wrangler 4xe, Dana secured a win for its full e-Propulsion offering on a heavy duty truck from a global manufacturer

This article was written by

Stephen Simpson profile picture
Stephen Simpson is a freelance financial writer and investor.Spent close to 15 years on the Street (sell-side, buy-side, equities, bonds).

Analyst’s Disclosure: I am/we are long BWA, FR.FR. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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