How The Wheels Came Off BorgWarner's Bus

Seth Jayson, The Motley Fool
Updated

BorgWarner (NYS: BWA) reported earnings on Oct. 31. Here are the numbers you need to know.

The 10-second takeaway
 For the quarter ended Sep. 30 (Q3), BorgWarner missed estimates on revenues and whiffed on earnings per share.

Compared to the prior-year quarter, revenue contracted and GAAP earnings per share dropped significantly.


Gross margins expanded, operating margins dropped, net margins shrank.

Revenue details
 BorgWarner notched revenue of $1.70 billion. The 15 analysts polled by S&P Capital IQ hoped for sales of $1.82 billion on the same basis. GAAP reported sales were 5.4% lower than the prior-year quarter's $1.79 billion.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
 EPS came in at $0.85. The 21 earnings estimates compiled by S&P Capital IQ averaged $1.19 per share. GAAP EPS of $0.85 for Q3 were 26% lower than the prior-year quarter's $1.15 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
 For the quarter, gross margin was 20.3%, 70 basis points better than the prior-year quarter. Operating margin was 9.6%, 150 basis points worse than the prior-year quarter. Net margin was 6.0%, 190 basis points worse than the prior-year quarter.

Looking ahead
 Next quarter's average estimate for revenue is $1.84 billion. On the bottom line, the average EPS estimate is $1.28.

Next year's average estimate for revenue is $7.42 billion. The average EPS estimate is $5.11.

Investor sentiment
 The stock has a four-star rating (out of five) at Motley Fool CAPS, with 399 members out of 433 rating the stock outperform, and 34 members rating it underperform. Among 111 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 103 give BorgWarner a green thumbs-up, and eight give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on BorgWarner is outperform, with an average price target of $80.00.

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The article How The Wheels Came Off BorgWarner's Bus originally appeared on Fool.com.

Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool owns shares of BorgWarner. Motley Fool newsletter services recommend 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.

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