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Commercial and off-highway vehicle demand can tell an investor a lot about the global economy. Dana Holding Corporation (DAN - Snapshot Report) recently surprised on the first quarter estimate and raised full year guidance. This Zacks #1 Rank (strong buy) is also cheap, trading at just 11.6x forward estimates.

Dana 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, including commercial vehicles and off-highway vehicles , in the world through 100 facilities in 26 countries.

Dana Beat By 21% in the First Quarter

On Apr 27, Dana reported its first quarter results and surprised on the Zacks Consensus by 6 cents. Earnings per share were 34 cents compared with the consensus of 28 cents. It was the third beat out of the last 4 quarters.

Sales jumped 20% to $1.8 billion from the first quarter of 2010.

Emerging Market Push

As part of its growth strategy, the company is making a push into the emerging markets, especially in the BRICs.

It entered into an agreement with Axles India, Ltc. to acquire select assets of its commercial truck axle business for $13 million. India's commercial vehicle market is growing at a compound annual rate of 8%. The transaction is expected to generate about $50 million in annual revenue.

In China, it recently announced it had broken ground on a technical center in Wuxi, Jiangsu. It will provide advanced product and applications engineering. It will be fully operation by the end of 2011.

The center joins 7 other facilities in which the company has an interest in China. In January, it announced it agreed to increase ownership of its joint venture, Dongfeng Dana Axle Co. to 50%, pending government approval.

In South America, Dana completed an agreement in February with SIFCO S.A. to add front steer axles to its product portfolio. It brought annual sales in South America to more than $1 billion.

Raised 2011 Guidance

The company is bullish about 2011 as the light and commercial vehicle market continues to improve worldwide. Commercial vehicle production was up 41% in the first quarter in North America.

The off-highway market also continues to improve as the mining, construction and agriculture sectors are boosted by higher commodity prices and farmer's incomes.

Dana now expects sales of more than 20% higher than 2010 up from the previous guidance of more than 17%.

Earnings per share are now expected between $1.55 and $1.65 per share up form $1.50 to $1.60. Free cash flow is also now projected at more than $175 million, up from the prior guidance of $150 million.

Zacks Consensus Estimates Rise

Not surprisingly, given the earnings guidance, analysts moved to raise 2011 estimates.

The 2011 Zacks Consensus Estimate rose to $1.59 from $1.44 in the last 30 days. That is earnings growth of 102% over 2010.

Analysts also expect a good 2012, with further earnings growth of 21.7%.

Dana Is Still a Value Stock

Dana continues to have solid value credentials. In addition to the P/E under 15, it has a price-to-book of 2.4. That is under the 3.0 I use as a cut-off for "value" stocks.

Its price-to-sales ratio (P/S) is also impressive.

At just 0.4, that is well under the average for the S&P 500 of 2.3. Also, a reading under 1.0 usually indicates value.

Additionally, the company has a strong 1-year return on equity (ROE) of 17.6%.

Shares Treading Water

Shares surged off the March 2009 lows when they traded for just a quarter. What a return that was if you bought at the bottom!

But in 2011, shares appear to be treading water around $18. Check out the 3-year chart.

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

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