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Auburn Hills, Michigan-based BorgWarner Inc. (BWA) provides solutions for combustion, hybrid, and electric vehicles worldwide. With a market cap of $7.7 billion, its offerings include turbochargers, Boosters, Turbos, emissions systems, thermal systems, gasoline ignition technology, and more.
BorgWarner has underperformed the broader market by a huge margin over the past year. BWA stock is down 2.2% in 2024 and up 7.5% over the past 52 weeks, lagging behind the S&P 500 Index’s ($SPX) surge of 25.2% on a YTD basis and 36.4% over the past 52-week period.
Zooming in further, BWA has also underperformed the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 18.6% gains on a YTD basis and 30.8% returns over the past year.
BorgWarner stock observed marginal gains after the release of its mixed Q3 earnings on Oct. 31. The company reported a robust 11.2% year-over-year growth in non-GAAP adjusted EPS to $1.09 which exceeded Wall Street’s earnings estimates a staggering 18.5%. However, due to declining market production volumes and a 5.6% decline in its weighted light and commercial vehicle markets, BorgWarner’s net sales plunged 4.8% compared to the year-ago quarter, falling to $3.4 billion, missing Wall Street’s estimates by 2.4%.
Nevertheless, BorgWarner has continued to demonstrate its commitment towards shareholders with the completion of its $400 million share repurchase program and consistent dividend payouts.
For the current fiscal year, ending in December, analysts expect BorgWarner to report a 12% year-over-year growth in adjusted EPS to $4.20. The company’s earnings surprise history is mixed. It surpassed analysts’ bottom-line estimates in three of the past four quarters while missing on another occasion.
BWA stock has a consensus “Moderate Buy” rating overall. Among the 17 analysts covering the stock, nine advise “Strong Buy,” one suggests a “Moderate Buy,” and seven recommend a “Hold” rating.
On Nov. 4, Deutsche Bank (DB) analyst Edison Yu raised BWA’s price target to $39 while maintaining a “Hold” rating.
BWA’s mean price target of $41.12 represents a premium of 17.3% from current price levels. The Street-high target of $50 suggests a potential upside of 42.6%.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
