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Should Value Investors Buy Dana (DAN) Stock?

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Zacks Equity Research
·3 min read
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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. 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 sporting a Zacks Rank of #2 (Buy) and an A for Value.

DAN is also sporting a PEG ratio of 1.47. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. DAN's industry has an average PEG of 3.02 right now. Over the past 52 weeks, DAN's PEG has been as high as 12.36 and as low as 0.37, with a median of 1.73.

Investors should also recognize that DAN has a P/B ratio of 2.05. 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 company's current P/B looks solid when compared to its industry's average P/B of 2.41. Over the past 12 months, DAN's P/B has been as high as 2.05 and as low as 0.32, with a median of 1.16.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. DAN has a P/S ratio of 0.55. This compares to its industry's average P/S of 1.01.

These are only a few of the key metrics included in Dana's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, DAN looks like an impressive value stock at the moment.


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