Dana (NYSE: DAN) and Meritor (NYSE:MTOR) are both mid-cap auto/tires/trucks companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, dividends, institutional ownership, profitability, earnings, analyst recommendations and risk.

Volatility and Risk

Dana has a beta of 1.49, meaning that its share price is 49% more volatile than the S&P 500. Comparatively, Meritor has a beta of 2.21, meaning that its share price is 121% more volatile than the S&P 500.

Insider and Institutional Ownership

98.6% of Dana shares are held by institutional investors. Comparatively, 93.2% of Meritor shares are held by institutional investors. 1.6% of Dana shares are held by insiders. Comparatively, 2.9% of Meritor shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent recommendations for Dana and Meritor, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dana 1 5 3 0 2.22
Meritor 0 3 5 0 2.63

Dana presently has a consensus price target of $23.13, indicating a potential downside of 13.87%. Meritor has a consensus price target of $25.44, indicating a potential downside of 3.17%. Given Meritor’s stronger consensus rating and higher probable upside, analysts plainly believe Meritor is more favorable than Dana.

Profitability

This table compares Dana and Meritor’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dana 10.80% 30.79% 6.84%
Meritor 17.03% -106.67% 5.68%

Dividends

Dana pays an annual dividend of $0.24 per share and has a dividend yield of 0.9%. Meritor does not pay a dividend. Dana pays out 5.1% of its earnings in the form of a dividend. Meritor has raised its dividend for 2 consecutive years.

Valuation & Earnings

This table compares Dana and Meritor’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Dana $6.37 billion 0.61 $704.00 million $4.71 5.70
Meritor $3.15 billion 0.74 $255.00 million $6.02 4.36

Dana has higher revenue and earnings than Meritor. Meritor is trading at a lower price-to-earnings ratio than Dana, indicating that it is currently the more affordable of the two stocks.

Summary

Meritor beats Dana on 10 of the 17 factors compared between the two stocks.

Dana Company Profile

Dana Incorporated, formerly Dana Holding Corporation, is a global provider of technology driveline, sealing and thermal-management products. The Company operates in four segments: Light Vehicle Driveline Technologies (Light Vehicle), Commercial Vehicle Driveline Technologies (Commercial Vehicle), Off-Highway Driveline Technologies (Off-Highway) and Power Technologies. It has operations in North America, South America, Europe and Asia pacific. Its Light Vehicle segment offers products, such as front axles, rear axles, driveshafts/propshafts, differentials, torque couplings and modular assemblies. Its Commercial Vehicle segment offers products, such as steer axles, drive axles, drive shafts and tire inflation systems. Its Off-Highway segment offers products, such as front axles, rear axles, drive shafts, transmissions, torque converters, tire inflation systems and electronic controls. Its Power Technologies segment offers products, including gaskets and cover modules.

Meritor Company Profile

Meritor, Inc. is a supplier of a range of integrated systems, modules and components to original equipment manufacturers (OEMs) and the aftermarket for the commercial vehicle, transportation and industrial sectors. The Company’s segments include Commercial Truck & Industrial and Aftermarket & Trailer. The Commercial Truck & Industrial segment supplies drivetrain systems and components, including axles, drivelines and braking and suspension systems, for medium- and heavy-duty trucks, off-highway, military, construction, bus and coach, fire and emergency and other applications in North America, South America, Europe and Asia Pacific. The Commercial Truck & Industrial segment also includes the Company’s aftermarket businesses in Asia Pacific and South America. The Aftermarket & Trailer segment supplies axles, brakes, drivelines, suspension parts and other replacement and remanufactured parts to commercial vehicle aftermarket customers in North America and Europe.

Receive News & Ratings for Dana Incorporated Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Dana Incorporated and related companies with MarketBeat.com's FREE daily email newsletter.