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BorgWarner (BWA)
NYSE:BWA
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BorgWarner
(NYSE:BWA)
Rating:76Outperform
Price Target:
$37.00
▲(9.08%Upside)
Positive Factors
Market leadership
BWA is highlighted as one of the best auto suppliers based on growth, margins, balance sheet, and valuation.
Strategic product offerings
BWA's strategy includes a strong ICE portfolio and a significant content opportunity on BEV, with inverter and eHeater products leading the market.
Negative Factors
Capital allocation issues
Investors criticize BWA for being a poor capital allocator, citing overpayments for technology acquisitions.
Growth challenges
Soft 2025 outlook slightly below 2024 and consensus.
BorgWarner (BWA) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.45B
Dividend Yield1.35%
Average Volume (3M)2.25M
Price to Earnings (P/E)27.3
Beta (1Y)0.69
Revenue Growth-8.22%
EPS Growth-52.61%
CountryUS
Employees38,300
SectorConsumer Cyclical
Sector Strength66
IndustryAuto - Parts
Share Statistics
EPS (TTM)1.11
Shares Outstanding219,720,050
10 Day Avg. Volume2,139,283
30 Day Avg. Volume2,247,687
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 Cap1.23
Enterprise Value/Revenue0.16
Enterprise Value/Gross Profit3.47
Enterprise Value/Ebitda1.35
Forecast
1Y Price Target
$37.00Price Target Upside9.08% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering12
BorgWarner Business Overview & Revenue Model
Company DescriptionBorgWarner Inc. is a global leader in providing innovative and sustainable mobility solutions for the automotive industry. The company is primarily involved in the design, manufacture, and sale of technologies for combustion, hybrid, and electric vehicles. BorgWarner operates in key sectors such as propulsion, drivetrain, and thermal management systems, serving both original equipment manufacturers (OEMs) and the aftermarket segment. With a strong focus on advancing electric and hybrid vehicle technology, BorgWarner is at the forefront of driving the transition towards cleaner and more efficient transportation solutions.
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 Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q1-2025)
| % Change Since: 17.37%|
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 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
33.92
Price Trends
29.85
Positive
29.90
Positive
31.64
Positive
Market Momentum
0.73
Positive
66.31
Neutral
54.94
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 33.92 is above the 20-day moving average (MA) of 32.86, above the 50-day MA of 29.85, and above the 200-day MA of 31.64, indicating a bullish trend. The MACD of 0.73 indicates Positive momentum. The RSI at 66.31 is Neutral, neither overbought nor oversold. The STOCH value of 54.94 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 0 New Risks
BorgWarner Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $15.32B | 11.66 | 15.52% | ― | -2.47% | -43.12% | |
77 Outperform | $8.56B | 11.75 | 50.15% | 1.03% | 3.86% | 16.02% | |
76 Outperform | $7.45B | 27.27 | 5.38% | 1.35% | -8.22% | -52.61% | |
75 Outperform | $5.09B | 11.17 | 10.00% | 3.41% | -3.15% | -6.70% | |
73 Outperform | $8.34B | 12.43 | 28.71% | 2.64% | -2.29% | 35.00% | |
66 Neutral | $5.00B | 13.05 | 15.90% | 2.22% | -1.66% | -9.20% | |
63 Neutral | $6.96B | 11.51 | 2.80% | 3.85% | 2.70% | -24.43% |
* Consumer Cyclical Sector Average
Performance Comparison
BWA
BorgWarner
33.92
0.14
0.41%
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ALV
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107.93
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APTV
Aptiv
70.19
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-6.75%
GNTX
Gentex
22.05
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LEA
Lear
95.23
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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
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.