Analyzing Dana (DAN) & Lear (LEA)
Dana (NYSE: DAN) and Lear (NYSE:LEA) are both mid-cap auto/tires/trucks companies, but which is the superior business? We will compare the two businesses based on the strength of their dividends, earnings, profitability, valuation, risk, analyst recommendations and institutional ownership.
Risk & Volatility
Dana has a beta of 1.67, meaning that its share price is 67% more volatile than the S&P 500. Comparatively, Lear has a beta of 1.43, meaning that its share price is 43% more volatile than the S&P 500.
This table compares Dana and Lear’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Insider and Institutional Ownership
96.5% of Dana shares are owned by institutional investors. Comparatively, 91.8% of Lear shares are owned by institutional investors. 1.6% of Dana shares are owned by insiders. Comparatively, 0.5% of Lear shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Dana pays an annual dividend of $0.24 per share and has a dividend yield of 0.8%. Lear pays an annual dividend of $2.00 per share and has a dividend yield of 1.1%. Dana pays out 5.0% of its earnings in the form of a dividend. Lear pays out 12.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Dana has raised its dividend for 2 consecutive years and Lear has raised its dividend for 6 consecutive years. Lear is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This is a summary of recent ratings and recommmendations for Dana and Lear, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Dana currently has a consensus price target of $27.13, indicating a potential downside of 14.81%. Lear has a consensus price target of $170.93, indicating a potential downside of 2.49%. Given Lear’s stronger consensus rating and higher possible upside, analysts plainly believe Lear is more favorable than Dana.
Earnings and Valuation
This table compares Dana and Lear’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Dana||$5.83 billion||0.79||$640.00 million||$4.78||6.66|
|Lear||$18.56 billion||0.64||$975.10 million||$16.36||10.71|
Lear has higher revenue and earnings than Dana. Dana is trading at a lower price-to-earnings ratio than Lear, indicating that it is currently the more affordable of the two stocks.
Lear beats Dana on 10 of the 17 factors compared between the two stocks.
Dana Incorporated, formerly Dana Holding Corporation, is a global provider of technology driveline, sealing and thermal-management products. The Company operates in four segments: Light Vehicle Driveline Technologies (Light Vehicle), Commercial Vehicle Driveline Technologies (Commercial Vehicle), Off-Highway Driveline Technologies (Off-Highway) and Power Technologies. It has operations in North America, South America, Europe and Asia pacific. Its Light Vehicle segment offers products, such as front axles, rear axles, driveshafts/propshafts, differentials, torque couplings and modular assemblies. Its Commercial Vehicle segment offers products, such as steer axles, drive axles, drive shafts and tire inflation systems. Its Off-Highway segment offers products, such as front axles, rear axles, drive shafts, transmissions, torque converters, tire inflation systems and electronic controls. Its Power Technologies segment offers products, including gaskets and cover modules.
Lear Corporation (Lear) is a supplier to the global automotive industry. The Company is engaged in supplying seating, electrical distribution systems and electronic modules, as well as related sub-systems, components and software, to automotive manufacturers. The Company’s segments include Seating and E-Systems. The Company serves the automotive and light truck market. The Seating segment consists of the design, development, engineering, just-in-time assembly and delivery of complete seat systems, as well as the design, development, engineering and manufacture of all seat components, including seat covers and surface materials, such as leather and fabric, seat structures and mechanisms, seat foam and headrests. The E-Systems segment consists of the design, development, engineering, manufacture, assembly and supply of electrical distribution systems, electronic modules and related components and software for light vehicles across the world.
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