BorgWarner Faces Market Challenges Despite Earnings Boost
Auburn Hills, Michigan-based BorgWarner Inc. (BWA) specializes in solutions for combustion, hybrid, and electric vehicles globally. With a market cap of $7.7 billion, the company’s product lineup features turbochargers, Boosters, emissions systems, thermal systems, and gasoline ignition technology, among others.
Mixed Performance in a Burgeoning Market
Over the past year, BorgWarner has significantly lagged behind the broader market. Currently, BWA stock has declined by 2.2% in 2024 and has managed a mere 7.5% increase over the past 52 weeks. Comparatively, the S&P 500 Index ($SPX) has surged 25.2% this year and 36.4% over the last year.
In addition, BWA has fallen short of the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 18.6% gains year-to-date and 30.8% over the past year.
Quarterly Earnings Reveal Mixed Results
Following its mixed Q3 earnings report released on October 31, BorgWarner’s stock witnessed slight gains. The company reported an impressive 11.2% year-over-year growth in non-GAAP adjusted EPS, reaching $1.09, which exceeded Wall Street’s expectations by a notable 18.5%. However, a decline in market production volumes, with a 5.6% drop in its light and commercial vehicle sectors, led to a 4.8% decrease in net sales from the previous year, totaling $3.4 billion, which fell short of analysts’ estimates by 2.4%.
Despite these challenges, BorgWarner remains committed to its shareholders, completing a $400 million share repurchase program while continuing consistent dividend payments.
Future Growth Prospects and Analyst Ratings
For the current fiscal year ending in December, analysts project a 12% year-over-year increase in adjusted EPS, predicting a figure of $4.20. BorgWarner’s earnings history has been mixed; it has outperformed analysts’ estimates in three of the past four quarters but has missed on one occasion.
Currently, BWA stock holds a “Moderate Buy” consensus rating. Among the 17 analysts monitoring the stock, nine are advocating a “Strong Buy,” one recommends a “Moderate Buy,” and seven suggest a “Hold” rating.
On November 4, Deutsche Bank (DB) analyst Edison Yu raised BWA’s price target to $39 while maintaining a “Hold” rating.
The average price target for BWA stands at $41.12, indicating a potential upside of 17.3% from current levels. The highest target among analysts sits at $50, suggesting an encouraging potential increase of 42.6%.
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On the date of publication, Aditya Sarawgi did not hold (either directly or indirectly) any positions in the securities mentioned in this article. All information and data provided here are for informational purposes only. For more information, please review the Barchart Disclosure Policy here.
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