Axle and auto parts maker Dana (DAN - Get Report) is doing its part to jump-start its stock price. 

Now the market must do its part. 

The Pitch

Shares of the 115-year old Dana have dropped 38% this year as investors fret about slowing U.S. auto sales and the U.S. trade war with China. But digging beneath the surface, Dana is far from a company struggling:

  • The company has made two key acquisitions recently that will help further diversify its business. One, TM4, will push Dana deeper into the axle market for electric vehicles. 
  • Second quarter sales grew a solid 12% on the back of increases in Dana's three key markets.. 
  • Management reiterated that it expects to hit the high-end of its financial guidance this year, supported by strength in the light and heavy truck markets. 
  • Executives signaled a more aggressive repurchasing of the company's stock (given the pullback) under a $200 million buyback plan. 

The Intangible

"I think there is a little bit of profit-taking," Dana CEO James Kamsickas tells TheStreet, pointing to the stock's 160% surge from Jan. 2016 to Jan. 2018. Kamsickas adds the stock may be tracking the softening in the auto sales market, rather than reflecting ongoing strength in trucks. 

"The fundamentals of the company have never been stronger," Kamsickas says.

JPMorgan agrees, mostly.

"We see several investment positives, which our neutral rating balances with below peer top line growth and middle of the pack earnings growth prospects as well as only modest leverage to industry secular growth trends," writes JPMorgan analyst Ryan Brinkman. "We expect Dana to grow earnings faster than sales given management's track record of margin improvement through operating efficiencies." 

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