BorgWarner Shares Popped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Auto parts supplier BorgWarner (NYS: BWA) is motoring higher by 12% today after the company raised its full-year earnings outlook for 2012.

So what: BorgWarner gave shareholders a lot to be thankful for in the new year by upping its EPS outlook for 2012 to a range of $5.35-$5.65 and expects revenue to be 10%-12% higher than in fiscal 2011. This compares very favorably to the $5.20 that Wall Street had been expecting from the company in the coming year. Perhaps best of all, BorgWarner's operating income margin is expected to be at 11.5% or better -- a record.

Now what: Just when you think the rally in auto parts suppliers is coming to an end, a company like BorgWarner comes out and completely debunks that theory. It's really hard to argue against a company like BorgWarner that's increasing expectations and margins, but it's also easy to pass on this highflier when you realize it still isn't paying shareholders a dividend. Perhaps when the dividend comes, so will my thumbs-up recommendation on the stock. Until that time, I'm a happy bystander.

Craving more input? Start by adding BorgWarner to your free and personalized watchlist so you can keep up on the latest news with the company.

At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Motley Fool newsletter services have recommended buying shares of BorgWarner. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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