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BorgWarner (BWA)
NYSE:BWA
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BorgWarner
(NYSE:BWA)62Neutral
Positive Factors
Financial Performance
Management raised the full-year EPS guidance by 4% and EBIT guidance by about 1% despite lowering sales expectations.
Market Position
Strong operational execution positions BWA as a standout performer in a challenging third quarter.
Negative Factors
Sales Outlook
BWA lowered its sales guidance by $150M, reflecting a decrease in production assumptions and lower mix in internal combustion engines and battery products.
BorgWarner (BWA) vs. S&P 500 (SPY)
Market Cap
$6.15B
Dividend Yield1.53%
Average Volume (3M)2.64M
Price to Earnings (P/E)18.7
Beta (1Y)0.74
Revenue Growth-11.10%
EPS Growth-46.32%
CountryUS
Employees38,300
SectorConsumer Cyclical
Sector Strength53
IndustryVehicles
Share Statistics
EPS (TTM)1.43
Shares Outstanding218,684,020
10 Day Avg. Volume2,277,506
30 Day Avg. Volume2,641,979
Financial Highlights & Ratios
PEG Ratio0.30
Price to Book (P/B)N/A
Price to Sales (P/S)0.45
Price to Cash Flow (P/CF)2.30
P/FCF Ratio2.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$38.75Price Target Upside37.80% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering12
BorgWarner Business Overview & Revenue Model
Company DescriptionBorgWarner, Inc. engages in the provision of technology solutions for combustion, hybrid and electric vehicles. It operates through the following segments: Engine and Drivetrain. The Engine segment develops and manufactures products to improve fuel economy, reduce emissions and enhance performance. The Drivetrain segment focuses in the products that improve fuel economy, reduce emissions, and enhance performance in combustion, hybrid and electric vehicles. The company was founded in 1928 and is headquartered in Auburn Hills, MI.
How the Company Makes MoneyBorgWarner makes money by producing and selling a wide range of automotive components and systems to original equipment manufacturers (OEMs) and aftermarket customers globally. The company's revenue model is diversified across its product lines, including powertrain products, drivetrain systems, and aftermarket services. Key revenue streams involve long-term contracts with leading automotive manufacturers for the supply of advanced propulsion technologies. Additionally, the company's focus on innovation and strategic acquisitions enhances its market position, allowing it to capitalize on the growing demand for cleaner and more energy-efficient vehicle technologies. Partnerships with major automotive brands and investments in electric and hybrid vehicle components further contribute to BorgWarner's earnings.
BorgWarner Financial Statement Overview
Summary
BorgWarner showcases a stable financial position with moderate profitability and strong cash flow generation. Despite recent revenue declines, the company maintains a balanced debt profile and healthy cash flow, suggesting resilience in operational cash management.Income Statement
BorgWarner's revenue has shown a decline in recent years, with a 0.79% decrease from 2023 to 2024 and a 10.16% decrease from 2022 to 2023. The gross profit margin in 2024 was 18.8%, and the net profit margin was 2.4%, both indicating moderate profitability. EBIT and EBITDA margins were 3.9% and 3.9% respectively in 2024, showing operational efficiency challenges.60
Neutral
Balance Sheet
The company's debt-to-equity ratio was 0.75 in 2024, reflecting a moderate leverage position. Return on Equity (ROE) stood at 6.1%, which indicates moderate efficiency in generating profits from equity. The equity ratio was 39.5% in 2024, suggesting a stable balance between equity and liabilities.65
Positive
Cash Flow
BorgWarner's free cash flow significantly improved from 2023 to 2024, indicating strong cash generation. The operating cash flow to net income ratio was 4.1 in 2024, reflecting strong cash flow relative to net income. The free cash flow to net income ratio was 4.1 as well, indicating robust cash flow conversion.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 14.09B | 14.20B | 15.80B | 14.84B | 10.16B | Gross Profit |
| 2.65B | 2.57B | 3.10B | 2.85B | 1.91B | EBIT |
| 546.00M | 1.16B | 781.00M | 635.00M | 87.00M | EBITDA |
| 1.30B | 1.67B | 1.64B | 1.69B | 1.58B | Net Income Common Stockholders |
| 338.00M | 625.00M | 944.00M | 537.00M | 500.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 2.09B | 1.53B | 1.34B | 1.84B | 1.65B | Total Assets |
| 13.99B | 14.45B | 16.99B | 16.57B | 16.03B | Total Debt |
| 4.16B | 3.93B | 4.23B | 4.33B | 3.79B | Net Debt |
| 2.07B | 2.40B | 2.89B | 2.49B | 2.14B | Total Liabilities |
| 8.29B | 8.39B | 9.49B | 9.31B | 9.28B | Stockholders Equity |
| 5.53B | 5.83B | 7.22B | 6.95B | 6.46B |
| Cash Flow | Free Cash Flow | |||
| 729.00M | 565.00M | 846.00M | 638.00M | 723.00M | Operating Cash Flow |
| 1.38B | 1.40B | 1.57B | 1.31B | 1.22B | Investing Cash Flow |
| 42.00M | -593.00M | -1.42B | -1.40B | -906.00M | Financing Cash Flow |
| -167.00M | -521.00M | -567.00M | 286.00M | 437.00M |
BorgWarner Technical Analysis
Negative
28.12
Price Trends
30.96
Negative
32.51
Negative
32.87
Negative
Market Momentum
-0.63
Positive
43.21
Neutral
23.80
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BWA, the sentiment is Negative. The current price of 28.12 is below the 20-day moving average (MA) of 29.59, below the 50-day MA of 30.96, and below the 200-day MA of 32.87, indicating a bearish trend. The MACD of -0.63 indicates Positive momentum. The RSI at 43.21 is Neutral, neither overbought nor oversold. The STOCH value of 23.80 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for BWA.
BorgWarner Risk Analysis
BorgWarner disclosed 37 risk factors in its most recent earnings report. BorgWarner reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
BorgWarner Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
82 Outperform | $480.65M | 2.97 | 11.02% | 9.21% | -11.02% | -51.66% | |
76 Outperform | $14.41B | 9.13 | 17.57% | ― | -1.69% | -33.56% | |
71 Outperform | $4.79B | 9.95 | 17.69% | 3.45% | -0.70% | -7.27% | |
64 Neutral | $2.00B | ― | -4.28% | 2.90% | -2.57% | -248.28% | |
62 Neutral | $6.15B | 18.70 | 6.11% | 1.53% | -11.10% | -46.32% | |
62 Neutral | $534.99M | 15.82 | 6.22% | ― | 0.75% | ― | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% |
* Consumer Cyclical Sector Average
Performance Comparison
BWA
BorgWarner
29.19
-2.33
-7.39%
AXL
American Axle
4.67
-1.99
-29.88%
DAN
Dana Holding
14.43
2.46
20.55%
APTV
Aptiv
65.09
-13.04
-16.69%
LEA
Lear
94.11
-42.17
-30.94%
TEN
Tsakos Energy Navigation
15.91
-6.06
-27.58%
BorgWarner Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: -9.44% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a balanced performance by BorgWarner in 2024. While the company demonstrated strong free cash flow, improved operating margins, and secured significant new product awards, it faced challenges such as flat sales growth, difficulties in China, and significant impairment charges. The outlook for 2025 includes industry volume declines and economic headwinds, but the company remains focused on cost control and strategic growth initiatives.Highlights
Strong Free Cash Flow
BorgWarner delivered $729 million of free cash flow, exceeding the full-year guidance and demonstrating strong cash flow generation capabilities.
Adjusted Operating Margin Above 10%
The adjusted operating margin was over 10% for the full year, marking a 50 basis point improvement from 2023 and surpassing the company's initial guidance.
New Product Awards
Secured multiple new product awards, including a variable cam timing system with an East Asian OEM and turbocharger programs with a North American OEM, highlighting strong foundational and e-product portfolio growth.
Earnings Per Share Growth
Adjusted earnings per share grew by 15%, reflecting strong operational performance and cost control.
Lowlights
Flat Sales Growth
2024 sales were approximately $14 billion, which was relatively flat compared to 2023, despite a 3% decline in industry production.
Challenges in China
Faced challenges in China due to lower volumes on an existing EV program and declining foundational sales, impacting year-over-year performance.
Goodwill and Fixed Asset Impairment
Recorded a $646 million impairment charge due to delayed BEV adoption, affecting the PowerDrive system and Battery and Charging Systems business units.
Declining Industry Volumes Expected
Forecast for 2025 includes expectations of declining industry volumes, with headwinds from global tariffs and economic challenges in key markets such as North America and Europe.
Company Guidance
In the 2024 BorgWarner earnings call, the company reported approximately $14 billion in sales, with an industry production decline of about 3% but achieving a 280 basis point outgrowth. Despite challenging markets, BorgWarner's adjusted operating margin exceeded 10%, surpassing their guidance, and adjusted earnings per share grew by 15%. The company generated $729 million in free cash flow, exceeding full-year guidance. Looking ahead to 2025, BorgWarner anticipates continued outgrowth compared to industry production, with an adjusted operating margin above 10% and strong free cash flow generation. The company's strategic focus includes leveraging core competencies to outperform industry production, expanding its product portfolio through organic and inorganic investments, and maintaining enhanced financial performance by managing costs and expanding margins.BorgWarner Corporate Events
DividendsBusiness Operations and StrategyFinancial Disclosures
BorgWarner Declares Quarterly Dividend Amidst Financial Results
Neutral
Feb 6, 2025
On February 5, 2025, BorgWarner’s Board declared a quarterly dividend of $0.11 per share, payable on March 17, 2025. BorgWarner reported its 2024 financial results, highlighting a decrease in net sales and earnings but maintaining a strong cash flow. The company secured new business awards, expecting continued sales growth and a stable operating margin in 2025 despite market challenges.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.