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

Profitability

This table compares Dana and BorgWarner’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%
BorgWarner 2.06% 20.75% 8.17%

Insider and Institutional Ownership

98.6% of Dana shares are held by institutional investors. Comparatively, 91.1% of BorgWarner shares are held by institutional investors. 1.6% of Dana shares are held by insiders. Comparatively, 0.7% of BorgWarner shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Dana and BorgWarner, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dana 1 5 3 0 2.22
BorgWarner 3 8 4 0 2.07

Dana presently has a consensus price target of $23.13, suggesting a potential downside of 15.17%. BorgWarner has a consensus price target of $43.36, suggesting a potential downside of 13.22%. Given BorgWarner’s higher probable upside, analysts plainly believe BorgWarner is more favorable than Dana.

Dividends

Dana pays an annual dividend of $0.24 per share and has a dividend yield of 0.9%. BorgWarner pays an annual dividend of $0.56 per share and has a dividend yield of 1.1%. Dana pays out 5.1% of its earnings in the form of a dividend. BorgWarner pays out 62.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Dana has increased its dividend for 2 consecutive years and BorgWarner has increased its dividend for 2 consecutive years.

Valuation and Earnings

This table compares Dana and BorgWarner’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 0.62 $704.00 million $4.71 5.79
BorgWarner $9.27 billion 1.14 $1.54 billion $0.89 56.14

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

Risk & Volatility

Dana has a beta of 1.49, meaning that its share price is 49% more volatile than the S&P 500. Comparatively, BorgWarner has a beta of 1.73, meaning that its share price is 73% more volatile than the S&P 500.

Summary

BorgWarner beats Dana on 9 of the 16 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.

BorgWarner Company Profile

BorgWarner Inc. is engaged in providing technology solutions for combustion, hybrid and electric vehicles. The Company’s segments include Engine and Drivetrain. The Engine segment’s products include turbochargers, timing devices and chains, emissions systems and thermal systems. The Engine segment develops and manufactures products for gasoline and diesel engines, and alternative powertrains. The Drivetrain segment’s products include transmission components and systems, all-wheel drive (AWD) torque transfer systems and rotating electrical devices. The Company’s products are manufactured and sold across the world, primarily to original equipment manufacturers (OEMs) of light vehicles (passenger cars, sport-utility vehicles (SUVs), vans and light trucks). The Company’s products are also sold to other OEMs of commercial vehicles (medium-duty trucks, heavy-duty trucks and buses) and off-highway vehicles (agricultural and construction machinery and marine applications.

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