Critical Survey: Garrett Motion (NASDAQ:GTX) vs. Dana (NYSE:DAN)

Dana (NYSE:DAN) and Garrett Motion (NASDAQ:GTX) are both mid-cap consumer discretionary companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, risk, valuation, earnings and analyst recommendations.

Institutional & Insider Ownership

96.8% of Dana shares are owned by institutional investors. Comparatively, 86.3% of Garrett Motion shares are owned by institutional investors. 1.5% of Dana shares are owned by company insiders. Comparatively, 1.1% of Garrett Motion shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and target prices for Dana and Garrett Motion, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Dana	1	3	5	0	2.44
Garrett Motion	0	2	6	0	2.75

Dana presently has a consensus target price of $35.00, suggesting a potential upside of 50.47%. Garrett Motion has a consensus target price of $37.00, suggesting a potential upside of 76.19%. Given Garrett Motion’s stronger consensus rating and higher possible upside, analysts plainly believe Garrett Motion is more favorable than Dana.

Volatility and Risk

Dana has a beta of 2.14, indicating that its stock price is 114% more volatile than the S&P 500. Comparatively, Garrett Motion has a beta of 0.95, indicating that its stock price is 5% less volatile than the S&P 500.

Dividends

Dana pays an annual dividend of $0.48 per share and has a dividend yield of 2.1%. Garrett Motion pays an annual dividend of $0.32 per share and has a dividend yield of 1.5%. Dana pays out 5.0% of its earnings in the form of a dividend. Garrett Motion pays out 16.4% 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Dana and Garrett Motion”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Dana	$7.78 billion	0.29	$85.00 million	$9.55	2.44
Garrett Motion	$3.58 billion	1.08	$310.00 million	$1.95	10.77

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Dana	13.45%	5.03%	1.29%
Garrett Motion	9.97%	-52.43%	15.48%

Summary

Dana beats Garrett Motion on 9 of the 16 factors compared between the two stocks.

About Dana

Dana Incorporated is a supplier of drivetrain, propulsion, and motion systems for vehicle and industrial markets. Its customers include manufacturers of passenger cars, commercial vehicles, and off-highway equipment, as well as customers in industrial and aftermarket sectors. The company’s products and services include axles, driveshafts, transmission and drivetrain components, and systems for electrified vehicles, such as electric motors and related propulsion technologies. Dana also provides thermal-management and sealing solutions designed to support vehicle performance and durability.

About Garrett Motion

Garrett Motion designs and manufactures automotive technologies focused on improving vehicle performance, fuel efficiency and emissions. Its products include turbochargers for passenger vehicles and commercial vehicles, along with electric boosting technologies that support conventional, hybrid and electric powertrains. The company also develops technologies for zero-emission applications, including compressors for hydrogen fuel-cell systems. Its products and engineering services are used by automakers and commercial-vehicle manufacturers around the world.