Dana Stock Rises 10% Despite Q2 Earnings Miss Expectations

DAN's Cost Actions Lift Profitability

Adjusted EBITDA increased to $207 million from $147 million in the year-ago quarter. Performance contributed $29 million to the improvement, while volume and mix added $10 million and cost savings contributed $19 million. Tariffs and foreign currency added $4 million and $2 million, respectively, while commodities were a $3 million headwind.

Year-to-date cost savings reached $54 million, keeping DAN on track for its $65 million 2026 target and the $325 million program goal. Net interest expense declined 59% year over year to $17 million following debt repayment after the Off-Highway divestiture.

Dana's Light Vehicle Business Improves

Light Vehicle sales increased 3.3% year over year to $1.38 billion from $1.34 billion. Segment adjusted EBITDA advanced 27.7% to $143 million from $112 million, showing stronger profit conversion than the sales increase.

Dana is also preparing for additional Ford Super Duty volume at Oakville. The company expects low-volume ramp-up production to begin during August, with volumes becoming more meaningful toward year-end, while largely using the existing footprint and capacity supporting U.S. Super Duty production.

DAN's Commercial Vehicle Results Strengthen

Commercial Vehicle sales rose 5.2% to $631 million from $600 million a year ago. Adjusted EBITDA climbed 44.7% to $68 million from $47 million as stronger demand supported the segment.

Dana expects North American Class 8 industry volume of roughly 275,000 units in 2026, followed by a marginal increase in 2027 and an uptick in 2028. Lower Class 5-7 and bus production is offsetting some of that strength.

Dana's Cash Flow and Buybacks Gain Ground

Operating cash flow improved to $109 million from $32 million, while adjusted free cash flow rose to $68 million from negative $7 million. Working capital and other items provided a $79 million year-over-year benefit, driven mainly by favorable accounts payable timing and lower inventories.

The company repurchased 1.2 million shares for $44 million in the quarter. Dana plans about $200 million of additional repurchases before year-end and expects to complete its $2 billion authorization by the end of 2029.

DAN Raises Sales, EBITDA and Cash Flow Outlook

DAN now expects 2026 sales of $7.65-$7.85 billion compared to the previous estimate of $7.3-$7.7 billion and adjusted EBITDA of $800-$850 million compared to the prior outlook of $750-$850 million. The sales midpoint increased $225 million from the prior outlook, while the adjusted EBITDA midpoint rose $25 million, primarily reflecting stronger commercial vehicle demand.

Adjusted free cash flow is now projected at $275-$375 million, up from the previous outlook of $250-$350 million. However, adjusted earnings are now expected in the range of $1.75-$2.25 per share compared with the previous estimate of $2-$3, with the midpoint revised lower to about $2. Higher depreciation, interest expense, lower equity earnings from China joint ventures and taxes are expected to pressure adjusted net income.

Dana's Eaton Mobility Combination Progresses

Dana and Eaton plan to use a split-off structure for the Mobility transaction, which remains on track to close in the first quarter of 2027. Dana expects at least $250 million of run-rate cost synergies within 24 months after closing, including about $75 million in year one and $200 million by year two.

The combined company is targeting $14-$15 billion of sales by 2030. Combined 2026 aftermarket sales are expected to total about $1.7 billion, representing roughly 16% of sales and increasing Dana's exposure to a business management views as higher margin and less cyclical.

DAN Expands Aftermarket and Defense Opportunities

Dana's aftermarket initiatives with AutoZone, Advance and O'Reilly are delivering $40 million of additional sales. A new partnership with VIPAR is expected to add $10-$15 million of aftermarket sales beginning later in 2026 while expanding distribution reach across its heavy-duty network.

Applied Technologies is also benefiting from defense demand. Existing programs and higher demand are generating $30 million of new sales, while Dana is working to secure a production order on a major rapid-prototype project by year-end.

DAN currently has a Zacks Rank #5 (Strong Sell). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Releases From Auto Space

General Motors Company GM reported second-quarter 2026 adjusted earnings of $3.57 per share, up 41.3% year over year. The figure beat the Zacks Consensus Estimate of $3.13 by 14.06%. Revenues increased 1.9% to $48.03 billion and surpassed the consensus estimate of $46.56 billion by 3.15%. Strong pricing, lower costs and disciplined incentives supported results. General Motors raised its full-year adjusted EBIT guidance to $14-$16 billion from $13.5-$15.5 billion. Adjusted earnings are now projected at $12-$14 per share, up from the prior range of $11.50-$13.50.

Tesla, Inc. TSLA reported second-quarter 2026 adjusted earnings of 33 cents per share, which declined 17.5% year over year. The figure missed the Zacks Consensus Estimate of 50 cents by 34%. Revenues advanced 25.5% to $28.24 billion and surpassed the consensus estimate of $25.81 billion by 9.41%. Tesla expects 2026 capital expenditures to exceed $25 billion and rise further over the next two to three years. 

Genuine Parts Company GPC reported second-quarter 2026 adjusted earnings of $2.15 per share, beating the Zacks Consensus Estimate of $2.10 by 2.38%. The bottom line increased 2.4% from $2.10 in the year-ago quarter. Revenues rose 6% year over year to $6.54 billion and surpassed the consensus estimate of $6.39 billion by 2.36%. Genuine Parts reaffirmed its 2026 adjusted earnings guidance of $7.50-$8 per share and total sales growth outlook of 3-5.5%. Genuine Parts ended June with $2.3 billion of liquidity, including $559 million in cash.

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