Why Dana Holding Shares Ran Out of Gas
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Dana Holding were left holding the bag today, falling as much as 16% after the company delivered a poor third-quarter earnings report.
So what: The auto-parts supplier missed on both the top and bottom lines, posting adjusted earnings of $0.47 per share versus estimates at $0.54 per share, while sales fell 2.7% to $1.67 billion, below the consensus at $1.78 billion. Management said the decline in sales was in part due to currency translation, a divestiture, and the end of a light vehicle program. It also cited "challenging demand in a number of end markets we serve around the world" in the construction mining and industries.
Now what: Adding insult to injury, Dana lowered its guidance for the year to sales of $6.7 billion and earnings per share of $1.76, below the analyst consensus of $7 billion in sales and EPS of $1.89. Cummins, one of the world's largest makers of truck engines, also cut its forecast in its report as global demand seems to have slowed, even as the general auto industry has outperformed this year. These problems for Dana are likely temporary as there seem to be no structural issues with the company. Demand in the construction and mining industries should eventually bounce back.
Where the auto boom is
U.S. automakers boomed after WWII, but the coming boom in the Chinese auto market will put that surge to shame! As Chinese consumers grow richer, savvy investors can take advantage of this once-in-a-lifetime opportunity with the help from this brand-new Motley Fool report that identifies two automakers to buy for a surging Chinese market. It's completely free -- just click here to gain access.
The article Why Dana Holding Shares Ran Out of Gas originally appeared on Fool.com.Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool recommends Cummins. The Motley Fool owns shares of Cummins. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.