BorgWarner Earnings Preview

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Investors are on the edge of their collective seats, hoping that BorgWarner (NYS: BWA) will top analyst expectations for the fifth consecutive quarter. The company will unveil its latest earnings on Tuesday, February 14. BorgWarner is a global supplier of engineered automotive systems and components, mainly for powertrain applications.

What analysts say:

  • Buy, sell, or hold?: The majority of analysts back BorgWarner as a buy. But with 60% of analysts rating it a buy, BorgWarner is still below the mean analyst rating of its nearest 10 competitors, which average 64.7% buys. Analysts like BorgWarner better than competitor Lear overall. Seven out of 12 analysts rate Lear a buy compared to nine of 15 for BorgWarner. Analysts still rate the stock a Moderate buy, but they are a bit more wary about it compared to three months ago.
  • Revenue Forecasts: On average, analysts predict $1.83 billion in revenue this quarter. That would represent a rise of 19.6% from the year-ago quarter.
  • Wall Street Earnings Expectations: The average analyst estimate is earnings of $1.15 per share. Estimates range from $1.09 to $1.24.

What our community says:
CAPS All-Stars are strongly supporting the stock, with 95.9% awarding it an "outperform" rating. The greater community concurs with the All-Stars, as 91.8% give it a rating of "outperform." Fools are bullish on BorgWarner and haven't been shy with their opinions lately, logging 109 posts in the past 30 days. Despite the majority sentiment in favor of BorgWarner, the stock has a middling CAPS rating of three out of five stars.

Management:
BorgWarner's profit has risen year-over-year by an average of 75.9% over the past five quarters.

Now let's look at how efficient management is at running the business. Traditionally, margins serve as an illustration of how efficiently a company captures portions of sales dollars. The company's gross margins have been increasing year-over-year for the last four quarters. Gross margins reflect the total sales revenue retained after costs. Here is how BorgWarner has been doing for the last four quarters:

Quarter

Q3

Q2

Q1

Q4

Gross Margin

19.6%

19.6%

19.8%

20%

Operating Margin

11.1%

12.6%

10.4%

10.3%

Net Margin

7.9%

8.9%

7.2%

7.3%

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Motley Fool newsletter services have recommended buying shares of BorgWarner.. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.

Earnings estimates provided by Zacks.

At the time this article was published

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