Are Investors Undervaluing Dana (DAN) Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
Dana (DAN) is a stock many investors are watching right now. DAN is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 10.63, while its industry has an average P/E of 18.59. DAN's Forward P/E has been as high as 15.92 and as low as 1.48, with a median of 6.19, all within the past year.
Another notable valuation metric for DAN is its P/B ratio of 1.26. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 2.41. Over the past 12 months, DAN's P/B has been as high as 1.45 and as low as 0.32, with a median of 1.13.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. DAN has a P/S ratio of 0.3. This compares to its industry's average P/S of 0.54.
Finally, we should also recognize that DAN has a P/CF ratio of 4.50. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. DAN's P/CF compares to its industry's average P/CF of 8.82. Within the past 12 months, DAN's P/CF has been as high as 4.83 and as low as 1.09, with a median of 3.95.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Dana is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, DAN feels like a great value stock at the moment.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.