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Here's Why You Should Offload Dana Stock From Your Portfolio
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Key Takeaways
Dana faces weaker EV orders, with $59 million in program termination charges through 1H 2026.
Lower China JV earnings helped drive Dana's 2026 adjusted EPS guidance down to $1.75-$2.25.
Dana's higher capital spending is limiting free cash flow growth despite improving EBITDA.
Dana Incorporated (DAN - Free Report) , a leading supplier of power-conveyance and energy-management technologies for the global automotive and commercial-vehicle markets, faces pressure from weak EV demand and lower China JV earnings. Eaton Mobility integration, OEM volume exposure, delayed cost recoveries and higher capital spending also create execution and cash-flow risks.
Let’s dig deeper and see why you should consider offloading this Zacks Rank #5 (Strong Sell) stock from your portfolio.
Lower EV Orders, Integration Complexity of Eaton Ail DAN
Lower electric-vehicle orders remained evident through the first half of 2026 for Dana, particularly in Europe and Asia Pacific. It recorded $59 million of electric-vehicle program termination charges in the first six months of 2026 for programs that were canceled by customers or experienced steep volume declines. If these cancellations and volume reductions continue, Dana’s electrification portfolio could contribute less to future growth even as traditional programs support the segment.
Dana lowered its full-year 2026 adjusted EPS guidance to $1.75 to $2.25, down from the previous expected range of $2 to $3. The decline is mainly due to higher depreciation and amortization from accelerated capital investment, higher interest expense related to refinancing and upfront spending for the Eaton Mobility transaction, and lower equity earnings from its China joint ventures. The company specifically identified lower China JV earnings as the largest contributor to the change, with taxes also creating an additional headwind. This creates a disconnect between improving operating performance and weaker bottom-line earnings, which could limit near-term EPS-driven upside for the stock.
Dana expects the Eaton Mobility transaction to close in the first quarter of 2027 and targets at least $250 million of run-rate cost synergies within 24 months after closing. The plan spans corporate functions, engineering, procurement, manufacturing, footprint rationalization and aftermarket networks, with cash costs expected below $250 million. Delivering those savings while integrating two businesses creates a broader execution burden as Dana finishes its existing cost program. Any delay in integration or synergy realization would reduce the expected financial benefits.
Dana’s awarded multi-year OEM programs do not require customers to purchase committed volumes, leaving revenues exposed to production changes. The second quarter of 2026 benefited from $45 million of pricing and cost recoveries, but material recovery mechanisms typically lag supplier cost changes by about 90 days. Recovery of non-material inflation is not specifically provided for in current customer contracts and can require prolonged negotiations. This structure leaves Dana dependent on customer production schedules and timely commercial recoveries to protect margins.
Dana generated $331 million of adjusted free cash flow in 2025 and now guides to $275-$375 million for 2026, with the $325 million midpoint still roughly flat year over year despite higher EBITDA. The company expects about $325 million of net capital spending in 2026 to support program launches, automation and other operational projects. First-half 2026 capital expenditures from continuing operations reached $204 million versus $104 million a year earlier, partly because Dana purchased three previously leased U.S. manufacturing facilities. While this expansion effort supports long-term operational improvements, it limits near-term free cash flow expansion.
Price Performance, Valuation and Estimates
DAN has underperformed the Zacks Automotive - Original Equipment industry in the last six months. Its shares have lost 12.8% compared with the industry’s decline of 2.3%.
Image Source: Zacks Investment Research
From a valuation perspective, DAN appears undervalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.4, lower than the industry’s 2.24.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for DAN’s 2026 EPS has declined 31 cents in the past 30 days.
The Zacks Consensus Estimate for CYD’s 2026 sales and earnings implies year-over-year growth of 58.6% and 68.6%, respectively.
The Zacks Consensus Estimate for GTX’s 2026 sales and earnings implies year-over-year growth of 7.2% and 25.7%, respectively. The EPS estimate for 2026 and 2027 has improved 5 cents and 4 cents, respectively, over the past 30 days.
View the Zacks #1 Rank List
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Here's Why You Should Offload Dana Stock From Your Portfolio
Key Takeaways
Dana Incorporated (DAN - Free Report) , a leading supplier of power-conveyance and energy-management technologies for the global automotive and commercial-vehicle markets, faces pressure from weak EV demand and lower China JV earnings. Eaton Mobility integration, OEM volume exposure, delayed cost recoveries and higher capital spending also create execution and cash-flow risks.
Let’s dig deeper and see why you should consider offloading this Zacks Rank #5 (Strong Sell) stock from your portfolio.
Lower EV Orders, Integration Complexity of Eaton Ail DAN
Lower electric-vehicle orders remained evident through the first half of 2026 for Dana, particularly in Europe and Asia Pacific. It recorded $59 million of electric-vehicle program termination charges in the first six months of 2026 for programs that were canceled by customers or experienced steep volume declines. If these cancellations and volume reductions continue, Dana’s electrification portfolio could contribute less to future growth even as traditional programs support the segment.
Dana lowered its full-year 2026 adjusted EPS guidance to $1.75 to $2.25, down from the previous expected range of $2 to $3. The decline is mainly due to higher depreciation and amortization from accelerated capital investment, higher interest expense related to refinancing and upfront spending for the Eaton Mobility transaction, and lower equity earnings from its China joint ventures. The company specifically identified lower China JV earnings as the largest contributor to the change, with taxes also creating an additional headwind. This creates a disconnect between improving operating performance and weaker bottom-line earnings, which could limit near-term EPS-driven upside for the stock.
Dana expects the Eaton Mobility transaction to close in the first quarter of 2027 and targets at least $250 million of run-rate cost synergies within 24 months after closing. The plan spans corporate functions, engineering, procurement, manufacturing, footprint rationalization and aftermarket networks, with cash costs expected below $250 million. Delivering those savings while integrating two businesses creates a broader execution burden as Dana finishes its existing cost program. Any delay in integration or synergy realization would reduce the expected financial benefits.
Dana’s awarded multi-year OEM programs do not require customers to purchase committed volumes, leaving revenues exposed to production changes. The second quarter of 2026 benefited from $45 million of pricing and cost recoveries, but material recovery mechanisms typically lag supplier cost changes by about 90 days. Recovery of non-material inflation is not specifically provided for in current customer contracts and can require prolonged negotiations. This structure leaves Dana dependent on customer production schedules and timely commercial recoveries to protect margins.
Dana generated $331 million of adjusted free cash flow in 2025 and now guides to $275-$375 million for 2026, with the $325 million midpoint still roughly flat year over year despite higher EBITDA. The company expects about $325 million of net capital spending in 2026 to support program launches, automation and other operational projects. First-half 2026 capital expenditures from continuing operations reached $204 million versus $104 million a year earlier, partly because Dana purchased three previously leased U.S. manufacturing facilities. While this expansion effort supports long-term operational improvements, it limits near-term free cash flow expansion.
Price Performance, Valuation and Estimates
DAN has underperformed the Zacks Automotive - Original Equipment industry in the last six months. Its shares have lost 12.8% compared with the industry’s decline of 2.3%.
Image Source: Zacks Investment Research
From a valuation perspective, DAN appears undervalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.4, lower than the industry’s 2.24.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for DAN’s 2026 EPS has declined 31 cents in the past 30 days.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks in the auto space are China Yuchai International Limited (CYD - Free Report) and Garrett Motion Inc. (GTX - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for CYD’s 2026 sales and earnings implies year-over-year growth of 58.6% and 68.6%, respectively.
The Zacks Consensus Estimate for GTX’s 2026 sales and earnings implies year-over-year growth of 7.2% and 25.7%, respectively. The EPS estimate for 2026 and 2027 has improved 5 cents and 4 cents, respectively, over the past 30 days.