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Factors Shaping the Fate of Dana Incorporated's (DAN) Q2 Earnings

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Dana Incorporated DAN is slated to release second-quarter 2021 results on Jul 30, before the opening bell. The Zacks Consensus Estimate for the quarter’s earnings is pegged at 49 cents per share on revenues of $2.12 billion.

The company registered robust earnings in the last reported quarter on higher-than-expected EBITDA from Off-Highway Driveline and Power Technologies segments.

Dana surpassed the Zacks Consensus Estimate in three of the preceding four quarters and missed in the other, the average surprise being 20.9%. This is depicted in the graph below:

Dana Incorporated Price and EPS Surprise

Dana Incorporated Price and EPS Surprise
Dana Incorporated Price and EPS Surprise

Dana Incorporated price-eps-surprise | Dana Incorporated Quote

Trend in Estimate Revisions

The Zacks Consensus Estimate for Dana’s second-quarter earnings per share witnessed a downward revision of four cents to 49 cents in the past seven days. Nonetheless, this compares favorably with the year-ago quarter’s loss of 69 cents per share, indicating a 171% jump. Also, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year surge of 96.2%.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Dana for the to-be-reported quarter, as it does not have the right combination of the two key ingredients. A combination of a positive Earnings ESP, and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the odds of an earnings beat. However, this is not the case for Dana as elaborated below.

Earnings ESP: Dana has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate is pegged at par with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Dana currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors Setting the Tone

Amid the soaring popularity of green vehicles, Dana has been widening its electrification footprint by offering a broad portfolio of e-Drive technologies and systems, as well as thermal-management solutions worldwide, especially for Chinese new energy vehicles. During the quarter under review, Dana launched the Spicer AdvanTEK Ultra axles to deliver superior vehicle performance and enhanced fuel efficiency. Also, Dana’s strategic acquisition of Pi Innovo, completed in the first quarter, fortifies the company’s e-propulsion software, controls, and electronics capabilities. These events are likely to have boosted the company’s sales and earnings during the June-end quarter.

The Zacks Consensus Estimate for sales from the Light Vehicle Driveline segment for the period in discussion is $926 million, suggesting a rise from the $337 million reported in the prior-year quarter. In addition, the consensus mark for the segment’s EBITDA is pinned at $105 million, calling for a reversal of the loss of $32 million seen in the last-year quarter.

The consensus mark for second-quarter sales from the Commercial Vehicle Driveline segment is pegged at $336 million, indicating an increase from the $200 million reported in the prior-year period. The same for the EBITDA from the segment is $14.7 million, indicating a reversal of the year-ago period’s loss of $8 million.

The consensus mark for the to-be-reported quarter’s sales from the Off-Highway Driveline segment is pinned at $633 million, calling for a surge from the $401 million witnessed in the prior-year quarter. The same for the segmental EBITDA is $82 million, indicating an improvement from the $38 million reported in the year-earlier period.

The consensus mark for quarterly sales from the Power Technologies segment is pegged at $267 million, indicating an increase from the $140 million recorded in the prior-year quarter. The consensus mark for the segment’s EBITDA is $35.2 million, suggesting a reversal from the loss of $1 million seen in the year-ago period.

Nonetheless, Dana’s second-quarter sales from the light vehicle business might have been adversely impacted to some extent by the global semiconductor chip dearth grappling the auto sector. Apart from this, higher raw material costs, especially for steel, logistics constraints and labor shortages related to COVID-19 restrictions, are expected to have tempered Dana’s profit margin for the June-end quarter.

Stocks With Favorable Combinations

Here are a few stocks in the auto sector which are worth considering, as these have the right combination of elements to come up with an earnings beat this time around:

General Motors GM has an Earnings ESP of +19.83% and flaunts a Zacks Rank #1, at present. It is scheduled to report earnings results on Aug 4.

Tenneco TEN has an Earnings ESP of +1.2% and currently carries a Zacks Rank #3. The company is slated to release quarterly numbers on Aug 5.

Lear Corporation LEA has an Earnings ESP of +3.05% and carries a Zacks Rank of 3, currently. The company is set to announce quarterly figures on Aug 6.


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Tenneco Inc. (TEN) : Free Stock Analysis Report

General Motors Company (GM) : Free Stock Analysis Report

Lear Corporation (LEA) : Free Stock Analysis Report

Dana Incorporated (DAN) : Free Stock Analysis Report

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