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Tracey Ryniec

Dana Holding Corporation

DAN

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The auto industry has staged a remarkable worldwide recovery. Dana Holding Corporation (DAN - Snapshot Report) is expected to see double digit earnings growth in both 2011 and 2012. Shares have value, trading with a Price-to-Sales ratio of just 0.4.

This Zacks #1 Rank (strong buy) manufactures driveline products, including axles, driveshafts and transmissions, as well as power technologies including sealing and thermal-management products. It also has an extensive aftermarket business.

The company sells to every major vehicle manufacturer in the world through 100 facilities in 26 countries.

Sales Rose 6.7% in the Fourth Quarter

On Feb 23, Dana reported its fourth quarter results which saw sales climb to $1.6 billion from $1.5 billion in the year ago period. Sales gained 17% to $6.1 billion in 2010.

The company is also expanding further in China. It recently signed an agreement, awaiting Chinese government approval, to increase its ownership of its joint venture, Dongfeng Dana Axle (DDAC) to 50%.

DDAC is the sole supplier of medium and heavy duty axles to China's second largest commercial vehicle manufacturer.

Raised 2011 Guidance

All was not good news on the quarter, though, as Dana actually missed on the Zacks Consensus Estimate by 77.8%. Earnings per share were just 4 cents compared to the Consensus of 18 cents.

However, the company is more bullish of things to come.

It expects 2011 revenue to rise 17% over 2010 which is much higher than the previous forecast of just 10% growth.

Earnings per share are now expected to be between $1.50 and $1.60 per share, up from the prior guidance of $1.30 to $1.40 per share.

Zacks Consensus Estimates Spike

Given the bullish guidance outlook, it's not surprising that the analysts have been pushing up estimates.

4 estimates have moved higher for 2011 in the last 7 days, boosting the 2011 Zacks Consensus by 33 cents to $1.49. This is just under the company's guidance range.

It is also earnings growth of 88.3%. Dana made just 79 cents in 2010.

2012 is looking up as well. The Zacks Consensus has risen 10 cents to $1.82 in the last week. This is further earnings growth of 22%.

The Value Is Still There

Dana has excellent value credentials. The company has a forward P/E of 12.8, which is under that of the S&P 500 of 14.2.

It also has a price-to-book ratio of just 2.6, under the "value" parameters of 3.0.

Shares Have Been on a Tear

Shares have gone from under 25 cents during the darkest times of the recession in 2009 to over $18 two years later.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.

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