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BorgWarner (BWA)
NYSE:BWA
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BorgWarner
(NYSE:BWA)
Rating:76Outperform
Price Target:
$37.00
▲( 13.12% Upside)
Positive Factors
Financial Performance
BorgWarner maintained strong margins and free cash flow despite a challenging revenue environment and significant impairments.
Growth Prospects
New business wins are providing stability across combustion, hybrid, and electric vehicles for BorgWarner.
Negative Factors
Currency Impact
A $140 million sales headwind from foreign exchange is expected to impact BorgWarner in 2025.
Outlook
Soft outlook for 2025 with forecasts slightly below previous estimates and consensus.
BorgWarner (BWA) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.26B
Dividend Yield1.32%
Average Volume (3M)2.41M
Price to Earnings (P/E)26.6
Beta (1Y)0.71
Revenue Growth-8.22%
EPS Growth-52.61%
CountryUS
Employees38,300
SectorConsumer Cyclical
Sector Strength74
IndustryAuto - Parts
Share Statistics
EPS (TTM)1.11
Shares Outstanding219,720,050
10 Day Avg. Volume2,691,362
30 Day Avg. Volume2,408,522
Financial Highlights & Ratios
PEG Ratio-0.32
Price to Book (P/B)1.25
Price to Sales (P/S)0.00
P/FCF Ratio9.77
Enterprise Value/Market Cap1.27
Enterprise Value/Revenue0.16
Enterprise Value/Gross Profit3.47
Enterprise Value/Ebitda1.35
Forecast
1Y Price Target
$36.92Price Target Upside12.87% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering12
BorgWarner Business Overview & Revenue Model
Company DescriptionBorgWarner Inc. provides solutions for combustion, hybrid, and electric vehicles worldwide. The company operates through four segments: Air Management, E-Propulsion & Drivetrain, Fuel Injection, and Aftermarket. The Air Management segment offers turbochargers, eBoosters, eTurbos, timing systems, emissions systems, thermal systems, gasoline ignition technology, smart remote actuators, powertrain sensors, canisters, cabin heaters, battery modules and systems, battery packs, battery heaters, and battery charging. The E-Propulsion & Drivetrain segment provides rotating electrical components, power electronics, control modules, software, friction, and mechanical products for automatic transmissions and torque-management products. The Fuel Injection segment develops and manufactures gasoline and diesel fuel injection components and systems. The Aftermarket segment sells products and services to independent aftermarket customers and original equipment service customers. This segment provides a range of solutions, including fuel injection, electronics and engine management, maintenance, and test equipment and vehicle diagnostics. The company sells its products to original equipment manufacturers of light vehicles, which comprise passenger cars, sport-utility vehicles, vans, and light trucks; commercial vehicles, including medium-duty and heavy-duty trucks, and buses; and off-highway vehicles, such as agricultural and construction machinery, and marine applications, as well as to tier one vehicle systems suppliers and the aftermarket for light, commercial, and off-highway vehicles. The company was formerly known as Borg-Warner Automotive, Inc. BorgWarner Inc. was incorporated in 1987 and is headquartered in Auburn Hills, Michigan.
How the Company Makes MoneyBorgWarner generates revenue through the sale of its diverse range of automotive components and systems. The company's key revenue streams include the production and supply of propulsion systems, including turbochargers, emissions systems, and electric propulsion components such as eMotors and power electronics. BorgWarner also earns from drivetrain products, including transmission and all-wheel drive systems, as well as from thermal management solutions that enhance vehicle efficiency and performance. Additionally, BorgWarner capitalizes on a robust aftermarket business, supplying replacement parts and services. Significant partnerships with automotive OEMs and a strategic focus on electric vehicle technologies further bolster the company's revenue by aligning with the industry's shift towards sustainable mobility.
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 |
| 1.32B | 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 |
| 4.34B | 3.93B | 4.23B | 4.33B | 3.79B | Net Debt |
| 2.25B | 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 |
| -603.00M | -593.00M | -1.42B | -1.40B | -906.00M | Financing Cash Flow |
| -167.00M | -521.00M | -567.00M | 286.00M | 437.00M |
BorgWarner Technical Analysis
Positive
32.71
Price Trends
28.90
Positive
29.84
Positive
31.68
Positive
Market Momentum
1.42
Negative
66.39
Neutral
79.69
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BWA, the sentiment is Positive. The current price of 32.71 is above the 20-day moving average (MA) of 30.79, above the 50-day MA of 28.90, and above the 200-day MA of 31.68, indicating a bullish trend. The MACD of 1.42 indicates Negative momentum. The RSI at 66.39 is Neutral, neither overbought nor oversold. The STOCH value of 79.69 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 2 New Risks
1.
We may not achieve some or all of the expected benefits of our restructuring plans and our restructuring actions may adversely affect our business. Q4, 2024
2.
Our benefit plan expenses and obligations may fluctuate depending on various factors, including changes in interest rates, changes in regulations and plan asset returns. Q4, 2024
BorgWarner Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $14.69B | 11.09 | 15.52% | ― | -2.47% | -43.12% | |
77 Outperform | $8.95B | 12.30 | 50.15% | 0.96% | 3.86% | 16.02% | |
76 Outperform | $7.26B | 26.58 | 5.38% | 1.32% | -8.22% | -52.61% | |
75 Outperform | $5.02B | 11.01 | 10.00% | 3.28% | -3.15% | -6.70% | |
73 Outperform | $7.88B | 11.75 | 28.71% | 2.71% | -2.29% | 35.00% | |
66 Neutral | $5.18B | 13.51 | 15.90% | 2.13% | -1.66% | -9.20% | |
62 Neutral | $6.97B | 11.36 | 2.77% | 3.91% | 2.66% | -22.00% |
* Consumer Cyclical Sector Average
Performance Comparison
BWA
BorgWarner
32.71
-2.67
-7.55%
ALSN
Allison Transmission Holdings
103.84
29.39
39.48%
ALV
Autoliv
100.54
-20.97
-17.26%
APTV
Aptiv
66.96
-14.75
-18.05%
GNTX
Gentex
22.16
-11.53
-34.22%
LEA
Lear
91.14
-31.95
-25.96%
BorgWarner Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q1-2025)
| % Change Since: 12.79%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Positive
BorgWarner demonstrated strong performance in eProducts and secured significant new business awards, which support future growth. The company also achieved notable improvements in operating margin and free cash flow. However, challenges such as exiting the charging business, consolidating battery systems in North America, and managing tariff impacts present headwinds. The overall sentiment is positive due to the substantial highlights outweighing the lowlights.Q1-2025 Updates
Positive Updates
Strong eProduct Sales Growth
Light vehicle eProduct sales increased by 47%, outperforming the 25% increase in global hybrid and BEV production, showcasing BorgWarner's product leadership and technology demand.
New Business Awards
BorgWarner secured multiple new product awards, including a Hybrid eMotor Award and a High-Voltage Coolant Heater Award, indicating strong future growth potential.
Improved Operating Margin
Adjusted operating margin performance was strong at 10%, reflecting effective cost controls and eProduct growth.
Free Cash Flow Improvement
Free cash flow improved by over $270 million or 89% year-over-year, demonstrating strong financial management.
Negative Updates
Exit from Charging Business
BorgWarner decided to exit its charging business due to lack of scale and market growth, resulting in the shutdown or sale of five locations.
North American Battery Systems Consolidation
Lower than expected demand led to capacity consolidation actions in North America, resulting in a $10 million cash cost and expected annual cost savings of $20 million by 2026.
Tariff Impact Concerns
The company faces a significant impact from tariffs, estimated at over $200 million, with ongoing efforts to mitigate and negotiate recoveries with customers.
Company Guidance
During the BorgWarner 2025 First Quarter Results Conference Call, several key metrics and guidance points were shared. The company reported organic sales of over $3.5 billion, remaining relatively flat despite a decline in market production. Sales outperformed the market by 3.7%, driven by a 47% increase in light vehicle eProduct sales. The adjusted operating margin was strong at 10%, and the free cash flow improved by over $270 million, or 89% year-over-year. The company decided to exit its charging business, which is expected to eliminate $30 million of annual operating losses, and consolidated battery production in North America, aiming for annual cost savings of approximately $20 million by 2026. Full-year 2025 sales guidance was updated to $13.6 billion to $14.2 billion, with an expected full-year sales outgrowth of 200 to 400 basis points. The adjusted EPS guidance remained at $4 to $4.45 per share, and free cash flow was projected to be between $650 million and $750 million. The company emphasized its ongoing focus on operational performance, cost control, and shareholder value creation.BorgWarner Corporate Events
Executive/Board ChangesShareholder MeetingsDividends
BorgWarner Elects Directors and Approves Compensation
Neutral
May 1, 2025
At the Annual Meeting on April 30, 2025, BorgWarner‘s stockholders elected eight directors to the Board and approved executive compensation and the selection of PricewaterhouseCoopers LLP as the independent auditor for 2025. A proposal to remove the one-year holding requirement for calling special meetings was rejected. Additionally, the Board declared a quarterly cash dividend of $0.11 per share, payable on June 16, 2025, to stockholders of record on June 2, 2025.
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.