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BorgWarner Declares Dividend of $0.13 Per Share

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Price movement

BorgWarner (BWA) has a market cap of $7.4 billion. It rose by 2.0% to close at $33.94 per share on July 26, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 6.5%, 11.3%, and -20.9%, respectively, on the same day. BWA is trading 10.4% above its 20-day moving average, 5.0% above its 50-day moving average, and 6.1% below its 200-day moving average.

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Related ETF and peers

The Vanguard Mid-Cap Growth ETF (VOT) invests 0.69% of its holdings in BorgWarner. The ETF tracks a market-cap-weighted index of mid-cap growth companies selected by the Center for Research in Security Prices. The YTD price movement of VOT was 7.8% on July 26.

The market caps of BorgWarner’s competitors are as follows:

  • Cummins (CMI): $20.8 billion
  • Lear (LEA): $8.6 billion
  • Tenneco (TEN): $3.2 billion

BorgWarner declares dividend

BorgWarner has declared a quarterly cash dividend of $0.13 per share on its common stock. The dividend will be paid on September 15, 2016, to shareholders of record on September 1, 2016.

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Performance in fiscal 1Q16

BorgWarner reported fiscal 1Q16 net sales of $2.3 billion, a rise of 14.3% from the net sales of $2.0 billion in fiscal 1Q15. The company’s gross profit margin fell by 5.6%. Its operating income rose by 1.8% between fiscals 1Q15 and 1Q16.

Its net income and EPS (earnings per share) fell to $164.1 million and $0.75, respectively, in fiscal 1Q16, compared with $178.9 million and $0.79, respectively, in fiscal 1Q15. It reported non-GAAP (non-generally accepted accounting principles) EPS of $0.80 in fiscal 1Q16, a rise of 2.6% from fiscal 1Q15.

BorgWarner’s cash fell by 32.1% and its inventories rose by 4.5% between fiscals 4Q15 and 1Q16. Its current ratio rose to 1.4x and its DE (debt-to-equity) ratio fell to 1.38x in fiscal 1Q16, compared with 1.3x and 1.43x, respectively, in fiscal 4Q15.

Projections

The company made the following projections for 2Q16:

  • net sales growth of 10.6%–16.0%
  • net sales growth of 1.5%–4.8%, which excludes the impact of foreign currencies and the Remy acquisition
  • EPS of $0.78–$0.83, which includes ~$0.03 per share contributed by the Remy acquisition

The company made the following projections for 2016:

  • net sales growth of 12.7%–17.5%
  • net sales growth of 2.5%–5.5%, which excludes the impact of foreign currencies and the Remy acquisition
  • EPS of $3.11–$3.32, which includes $0.12 per share contributed by the Remy acquisition

In the next part, we’ll discuss Graphic Packaging Holding Company.

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