Investment Thesis
Dana Inc faces significant financial stress with deteriorating operational metrics despite flat net income. The company exhibits dangerously low margins (2.8% gross, 1.9% operating), inadequate interest coverage (0.8x), and elevated leverage (3.05x debt/equity), indicating limited financial flexibility. While positive free cash flow provides some buffer, margin compression and revenue decline signal competitive pressures that outweigh near-term liquidity comfort.
Strengths
- Positive free cash flow of $298M provides operating flexibility
- Adequate cash position of $469M offers near-term liquidity cushion
- Strong insider filing activity (32 Form 4s) suggests management engagement with capital deployment
Risks
- Dangerous interest coverage ratio of 0.8x indicates insufficient earnings to service debt obligations
- Razor-thin operating margin of 1.9% leaves minimal room for operational errors or sector downturns
- Revenue decline of 3.0% YoY combined with margin compression signals loss of competitive positioning in motor vehicle parts sector
- Debt-to-equity ratio of 3.05x represents heavy leverage with limited covenant flexibility
- Current ratio of 1.17x and quick ratio of 0.86x indicate tight working capital management
Key Metrics to Watch
- Operating margin trend and gross margin stability
- Interest coverage ratio improvement toward sustainable levels (>2.0x)
- Revenue growth inflection and customer retention
- Free cash flow sustainability and debt reduction progress
- Debt-to-equity ratio trajectory toward industry norms
Financial Metrics
Revenue
7.5B
Net Income
85.0M
EPS (Diluted)
$0.64
Free Cash Flow
298.0M
Total Assets
7.8B
Cash
469.0M
Profitability Ratios
Gross Margin
2.8%
Operating Margin
1.9%
Net Margin
1.1%
ROE
10.1%
ROA
1.1%
FCF Margin
4.0%
Balance Sheet & Liquidity
Current Ratio
1.17x
Quick Ratio
0.86x
Debt/Equity
3.05x
Debt/Assets
88.5%
Interest Coverage
0.77x
Long-term Debt
2.6B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-03-23T09:06:10.561796 |
Data as of: 2025-12-31 |
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