Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Why It's Better To Hold BorgWarner (BWA) In Your Portfolio?

Published 05/29/2017, 08:09 AM
Updated 07/09/2023, 06:31 AM

On May 29, Zacks Investment Research downgraded BorgWarner Inc. (NYSE:BWA) to a Zacks Rank #3 (Hold).

The company recorded adjusted earnings of 91 cents per share in the first quarter of 2017, higher than 80 cents per share in the year-ago quarter. Earnings also topped the Zacks Consensus Estimate of 84 cents.

Revenues rose 6.1% year over year to $2,407 million and beat the Zacks Consensus Estimate of $2,250 million.

The company reiterated its projection to generate net new business of $410–$590 million in 2017, $460–$670 million in 2018 and $500–$700 million in 2019. As a result, organic compound annual growth rate (CAGR) is estimated at 5–7% from 2016 through 2019. About 62% of the new net business in the 2016–2019 period is expected to stem from engine-related products, while the remaining 38% should be generated from drivetrain-related products. Asia, the Americas and Europe are expected to generate 40%, 39% and 21% of the new business, respectively, over three years. China (32%) and North America (25%) are anticipated to contribute to a major portion of growth.

BorgWarner’s healthy balance sheet and ample cash flows help it to return capital to its shareholders and undertake acquisitions. It is also poised to benefit from its various expansion programs including the ones in Asia and South America.

However, BorgWarner’s shares have underperformed the Zacks categorized Automotive-Original Equipment industry in the last six months. The company’s shares have rallied 15.1% during the period, whereas the industry has recorded a gain of 18.5%.

The company is affected by foreign currency translations and the impact of the sale of Remy light vehicle aftermarket business. The adverse impact of foreign currencies reduced its net sales by $111 million and net earnings by 5 cents per share in 2016. Also, a negative impact of around $310 million for full-year 2017 is expected from foreign currencies.

In second-quarter 2017, foreign currencies are likely to impact earnings by 5 cents per share. Moreover, foreign currencies are expected to have a negative impact of $115 million on net sales in the second quarter.

BorgWarner Inc. Price and Consensus

Stocks to Consider

Better-ranked companies in the auto space include Allison Transmission Holdings Inc. (NYSE:ALSN) , Ferrari N.V. (NYSE:RACE) and Dana Incorporated (NYSE:DAN) . All three sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Allison Transmission has an expected long-term growth rate of 11%.

Ferrari has an expected long-term growth rate of 14.1%.

Dana has an expected long-term growth rate of 3%.

Looking for Ideas with Even Greater Upside?

Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>



BorgWarner Inc. (BWA): Free Stock Analysis Report

Allison Transmission Holdings, Inc. (ALSN): Free Stock Analysis Report

Dana Incorporated (DAN): Free Stock Analysis Report

Ferrari N.V. (RACE): Free Stock Analysis Report

Original post

Zacks Investment Research

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.