Intrinsic value of Dana Incorporated - DAN

Previous Close

$16.54

  Intrinsic Value

$45.39

stock screener

  Rating & Target

str. buy

+174%

Previous close

$16.54

 
Intrinsic value

$45.39

 
Up/down potential

+174%

 
Rating

str. buy

We calculate the intrinsic value of DAN stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 0001), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 2.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
   2
   3
   4
   5
   6
   7
   8
   9
   10
   11
   12
   13
   14
   15
   16
   17
   18
   19
   20
   21
   22
   23
   24
   25
   26
   27
   28
   29
   30
   31

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  7.40
  7.16
  6.94
  6.75
  6.57
  6.42
  6.28
  6.15
  6.03
  5.93
  5.84
  5.75
  5.68
  5.61
  5.55
  5.49
  5.44
  5.40
  5.36
  5.32
  5.29
  5.26
  5.24
  5.21
  5.19
  5.17
  5.16
  5.14
  5.13
  5.11
Revenue, $m
  8,746
  9,372
  10,023
  10,699
  11,402
  12,134
  12,896
  13,688
  14,514
  15,375
  16,272
  17,209
  18,186
  19,206
  20,272
  21,385
  22,550
  23,767
  25,041
  26,375
  27,770
  29,232
  30,762
  32,366
  34,046
  35,807
  37,653
  39,588
  41,618
  43,745
Variable operating expenses, $m
  8,113
  8,691
  9,291
  9,915
  10,564
  11,240
  11,942
  12,674
  13,436
  14,230
  15,015
  15,879
  16,781
  17,722
  18,705
  19,733
  20,808
  21,931
  23,107
  24,337
  25,625
  26,973
  28,386
  29,866
  31,416
  33,041
  34,744
  36,530
  38,402
  40,366
Fixed operating expenses, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  8,113
  8,691
  9,291
  9,915
  10,564
  11,240
  11,942
  12,674
  13,436
  14,230
  15,015
  15,879
  16,781
  17,722
  18,705
  19,733
  20,808
  21,931
  23,107
  24,337
  25,625
  26,973
  28,386
  29,866
  31,416
  33,041
  34,744
  36,530
  38,402
  40,366
Operating income, $m
  633
  681
  732
  784
  838
  895
  953
  1,015
  1,079
  1,145
  1,257
  1,329
  1,405
  1,484
  1,566
  1,652
  1,742
  1,836
  1,935
  2,038
  2,145
  2,258
  2,377
  2,500
  2,630
  2,766
  2,909
  3,058
  3,215
  3,380
EBITDA, $m
  942
  1,010
  1,080
  1,153
  1,229
  1,307
  1,390
  1,475
  1,564
  1,657
  1,753
  1,854
  1,959
  2,069
  2,184
  2,304
  2,430
  2,561
  2,698
  2,842
  2,992
  3,150
  3,315
  3,487
  3,668
  3,858
  4,057
  4,266
  4,484
  4,714
Interest expense (income), $m
  111
  96
  115
  134
  153
  174
  195
  217
  241
  265
  290
  316
  343
  371
  401
  432
  464
  498
  533
  570
  609
  649
  692
  736
  783
  831
  882
  936
  992
  1,050
  1,112
Earnings before tax, $m
  537
  567
  598
  630
  664
  699
  736
  774
  814
  855
  941
  986
  1,034
  1,083
  1,134
  1,188
  1,244
  1,303
  1,364
  1,429
  1,496
  1,567
  1,640
  1,718
  1,799
  1,884
  1,973
  2,067
  2,165
  2,268
Tax expense, $m
  145
  153
  161
  170
  179
  189
  199
  209
  220
  231
  254
  266
  279
  292
  306
  321
  336
  352
  368
  386
  404
  423
  443
  464
  486
  509
  533
  558
  585
  612
Net income, $m
  392
  414
  436
  460
  485
  511
  537
  565
  594
  624
  687
  720
  755
  790
  828
  867
  908
  951
  996
  1,043
  1,092
  1,144
  1,198
  1,254
  1,313
  1,375
  1,441
  1,509
  1,580
  1,655

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  6,356
  6,811
  7,284
  7,775
  8,287
  8,818
  9,372
  9,948
  10,548
  11,174
  11,826
  12,506
  13,216
  13,958
  14,732
  15,542
  16,388
  17,273
  18,199
  19,168
  20,182
  21,244
  22,356
  23,522
  24,743
  26,023
  27,364
  28,771
  30,245
  31,792
Adjusted assets (=assets-cash), $m
  6,356
  6,811
  7,284
  7,775
  8,287
  8,818
  9,372
  9,948
  10,548
  11,174
  11,826
  12,506
  13,216
  13,958
  14,732
  15,542
  16,388
  17,273
  18,199
  19,168
  20,182
  21,244
  22,356
  23,522
  24,743
  26,023
  27,364
  28,771
  30,245
  31,792
Revenue / Adjusted assets
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
  1.376
Average production assets, $m
  2,160
  2,315
  2,476
  2,643
  2,816
  2,997
  3,185
  3,381
  3,585
  3,798
  4,019
  4,251
  4,492
  4,744
  5,007
  5,282
  5,570
  5,871
  6,185
  6,515
  6,859
  7,220
  7,598
  7,994
  8,409
  8,844
  9,300
  9,778
  10,280
  10,805
Working capital, $m
  708
  759
  812
  867
  924
  983
  1,045
  1,109
  1,176
  1,245
  1,318
  1,394
  1,473
  1,556
  1,642
  1,732
  1,827
  1,925
  2,028
  2,136
  2,249
  2,368
  2,492
  2,622
  2,758
  2,900
  3,050
  3,207
  3,371
  3,543
Total debt, $m
  2,123
  2,475
  2,840
  3,220
  3,616
  4,027
  4,454
  4,900
  5,364
  5,847
  6,351
  6,877
  7,426
  7,999
  8,598
  9,224
  9,878
  10,562
  11,278
  12,027
  12,811
  13,632
  14,492
  15,392
  16,336
  17,326
  18,363
  19,450
  20,590
  21,785
Total liabilities, $m
  4,913
  5,265
  5,630
  6,010
  6,406
  6,817
  7,244
  7,690
  8,154
  8,637
  9,141
  9,667
  10,216
  10,789
  11,388
  12,014
  12,668
  13,352
  14,068
  14,817
  15,601
  16,422
  17,282
  18,182
  19,126
  20,116
  21,153
  22,240
  23,380
  24,575
Total equity, $m
  1,443
  1,546
  1,653
  1,765
  1,881
  2,002
  2,127
  2,258
  2,394
  2,536
  2,684
  2,839
  3,000
  3,168
  3,344
  3,528
  3,720
  3,921
  4,131
  4,351
  4,581
  4,822
  5,075
  5,339
  5,617
  5,907
  6,212
  6,531
  6,866
  7,217
Total liabilities and equity, $m
  6,356
  6,811
  7,283
  7,775
  8,287
  8,819
  9,371
  9,948
  10,548
  11,173
  11,825
  12,506
  13,216
  13,957
  14,732
  15,542
  16,388
  17,273
  18,199
  19,168
  20,182
  21,244
  22,357
  23,521
  24,743
  26,023
  27,365
  28,771
  30,246
  31,792
Debt-to-equity ratio
  1.470
  1.600
  1.720
  1.820
  1.920
  2.010
  2.090
  2.170
  2.240
  2.310
  2.370
  2.420
  2.480
  2.520
  2.570
  2.610
  2.660
  2.690
  2.730
  2.760
  2.800
  2.830
  2.860
  2.880
  2.910
  2.930
  2.960
  2.980
  3.000
  3.020
Adjusted equity ratio
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227
  0.227

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  392
  414
  436
  460
  485
  511
  537
  565
  594
  624
  687
  720
  755
  790
  828
  867
  908
  951
  996
  1,043
  1,092
  1,144
  1,198
  1,254
  1,313
  1,375
  1,441
  1,509
  1,580
  1,655
Depreciation, amort., depletion, $m
  309
  329
  348
  369
  391
  413
  436
  460
  485
  512
  496
  525
  555
  586
  618
  652
  688
  725
  764
  804
  847
  891
  938
  987
  1,038
  1,092
  1,148
  1,207
  1,269
  1,334
Funds from operations, $m
  701
  742
  785
  829
  875
  923
  973
  1,025
  1,080
  1,136
  1,183
  1,245
  1,309
  1,376
  1,446
  1,519
  1,596
  1,676
  1,760
  1,847
  1,939
  2,035
  2,136
  2,241
  2,352
  2,467
  2,589
  2,716
  2,849
  2,989
Change in working capital, $m
  49
  51
  53
  55
  57
  59
  62
  64
  67
  70
  73
  76
  79
  83
  86
  90
  94
  99
  103
  108
  113
  118
  124
  130
  136
  143
  150
  157
  164
  172
Cash from operations, $m
  652
  691
  732
  774
  818
  864
  912
  961
  1,013
  1,066
  1,111
  1,169
  1,230
  1,293
  1,360
  1,429
  1,501
  1,577
  1,656
  1,739
  1,826
  1,917
  2,012
  2,111
  2,215
  2,325
  2,439
  2,559
  2,685
  2,817
Maintenance CAPEX, $m
  -248
  -267
  -286
  -306
  -326
  -348
  -370
  -393
  -417
  -443
  -469
  -496
  -525
  -555
  -586
  -618
  -652
  -688
  -725
  -764
  -804
  -847
  -891
  -938
  -987
  -1,038
  -1,092
  -1,148
  -1,207
  -1,269
New CAPEX, $m
  -149
  -155
  -161
  -167
  -174
  -181
  -188
  -196
  -204
  -213
  -222
  -231
  -241
  -252
  -263
  -275
  -288
  -301
  -315
  -329
  -345
  -361
  -378
  -396
  -415
  -435
  -456
  -478
  -501
  -526
Cash from investing activities, $m
  -397
  -422
  -447
  -473
  -500
  -529
  -558
  -589
  -621
  -656
  -691
  -727
  -766
  -807
  -849
  -893
  -940
  -989
  -1,040
  -1,093
  -1,149
  -1,208
  -1,269
  -1,334
  -1,402
  -1,473
  -1,548
  -1,626
  -1,708
  -1,795
Free cash flow, $m
  255
  270
  286
  302
  318
  336
  354
  372
  391
  411
  420
  442
  464
  487
  511
  536
  562
  589
  617
  646
  677
  709
  742
  777
  813
  852
  891
  933
  977
  1,022
Issuance/(repayment) of debt, $m
  340
  352
  366
  380
  395
  411
  428
  445
  464
  484
  504
  526
  549
  573
  599
  626
  654
  684
  716
  749
  784
  821
  860
  901
  944
  989
  1,037
  1,087
  1,140
  1,195
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  340
  352
  366
  380
  395
  411
  428
  445
  464
  484
  504
  526
  549
  573
  599
  626
  654
  684
  716
  749
  784
  821
  860
  901
  944
  989
  1,037
  1,087
  1,140
  1,195
Total cash flow (excl. dividends), $m
  595
  622
  651
  682
  714
  747
  781
  817
  855
  895
  924
  968
  1,013
  1,060
  1,110
  1,161
  1,216
  1,273
  1,333
  1,395
  1,461
  1,530
  1,602
  1,678
  1,757
  1,841
  1,928
  2,020
  2,117
  2,218
Retained Cash Flow (-), $m
  -98
  -103
  -107
  -112
  -116
  -121
  -126
  -131
  -136
  -142
  -148
  -154
  -161
  -168
  -176
  -184
  -192
  -201
  -210
  -220
  -230
  -241
  -253
  -265
  -277
  -291
  -305
  -319
  -335
  -351
Prev. year cash balance distribution, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
  497
  519
  544
  570
  598
  626
  656
  687
  719
  753
  776
  813
  852
  892
  934
  978
  1,024
  1,072
  1,122
  1,175
  1,231
  1,289
  1,350
  1,413
  1,480
  1,550
  1,624
  1,701
  1,782
  1,867
Discount rate, %
  5.30
  5.57
  5.84
  6.14
  6.44
  6.76
  7.10
  7.46
  7.83
  8.22
  8.63
  9.06
  9.52
  9.99
  10.49
  11.02
  11.57
  12.15
  12.76
  13.39
  14.06
  14.77
  15.50
  16.28
  17.09
  17.95
  18.85
  19.79
  20.78
  21.82
PV of cash for distribution, $m
  472
  465
  459
  449
  437
  423
  406
  386
  365
  342
  312
  287
  261
  235
  209
  184
  159
  136
  115
  95
  78
  62
  49
  38
  29
  21
  15
  11
  7
  5
Current shareholders' claim on cash, %
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

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.

FINANCIAL RATIOS  of  Dana Incorporated (DAN)

Valuation Ratios
P/E Ratio 3.7
Price to Sales 0.4
Price to Book 2.1
Price to Tangible Book
Price to Cash Flow 6.2
Price to Free Cash Flow 38.4
Growth Rates
Sales Growth Rate -3.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 23.8%
Cap. Spend. - 3 Yr. Gr. Rate 9%
Financial Strength
Quick Ratio 11
Current Ratio 0
LT Debt to Equity 137.9%
Total Debt to Equity 143.8%
Interest Coverage 3
Management Effectiveness
Return On Assets 21.2%
Ret/ On Assets - 3 Yr. Avg. 11.9%
Return On Total Capital 25%
Ret/ On T. Cap. - 3 Yr. Avg. 14.2%
Return On Equity 67.9%
Return On Equity - 3 Yr. Avg. 37.4%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 14.5%
Gross Margin - 3 Yr. Avg. 14.3%
EBITDA Margin 8.7%
EBITDA Margin - 3 Yr. Avg. 9%
Operating Margin 5.4%
Oper. Margin - 3 Yr. Avg. 5.9%
Pre-Tax Margin 3.7%
Pre-Tax Margin - 3 Yr. Avg. 4.1%
Net Profit Margin 11%
Net Profit Margin - 3 Yr. Avg. 6.1%
Effective Tax Rate -197.2%
Eff/ Tax Rate - 3 Yr. Avg. -65.4%
Payout Ratio 5.5%

DAN stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DAN stock intrinsic value calculation we used $8143 million for the last fiscal year's total revenue generated by Dana Incorporated. The default revenue input number comes from 0001 income statement of Dana Incorporated. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our DAN stock valuation model: a) initial revenue growth rate of 7.4% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.3%, whose default value for DAN is calculated based on our internal credit rating of Dana Incorporated, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Dana Incorporated.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of DAN stock the variable cost ratio is equal to 92.8%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for DAN stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.4% for Dana Incorporated.

Corporate tax rate of 27% is the nominal tax rate for Dana Incorporated. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the DAN stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for DAN are equal to 24.7%.

Life of production assets of 8.1 years is the average useful life of capital assets used in Dana Incorporated operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for DAN is equal to 8.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $1345 million for Dana Incorporated - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 143.640 million for Dana Incorporated is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Dana Incorporated at the current share price and the inputted number of shares is $2.4 billion.

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