uploads/2016/10/bwa-pm-2.png

BorgWarner Plans to Sell Its Remy Light Vehicle Aftermarket Business

By

Updated

Price movement

BorgWarner (BWA) has a market cap of $7.6 billion. It rose 0.03% to close at $35.19 per share on October 3, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 1.3%, 1.7%, and -17.6%, respectively, on the same day.

BWA is trading 0.78% above its 20-day moving average, 3.2% above its 50-day moving average, and 3.2% above its 200-day moving average.

Article continues below advertisement

Related ETF and peers

The First Trust Large Cap Value AlphaDex ETF (FTA) invests 0.56% of its holdings in BorgWarner. The ETF tracks an index that selects and weights value stocks from the S&P 500 Value Index using fundamental factors including sales, book value, and cash flows. The YTD price movement of FTA was 10.3% on October 3.

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

  • Cummins (CMI): $21.6 billion
  • Lear Corporation (LEA): $8.9 billion
  • Tenneco (TEN): $3.3 billion

Latest news on BorgWarner

In a press release on October 3, 2016, BorgWarner (BWA) reported, “BorgWarner has agreed to sell its REMY light vehicle aftermarket business to an investor group led by Torque Capital Group. The sale includes manufacturing facilities in San Luis Potosi, Mexico; Piedras Negras, Mexico; Twinsburg, Ohio; Edmond, Oklahoma; Brussels, Belgium; Jemmal (Menzel Harb), Tunisia; and Miskolc, Hungary.

“The business employs a total of approximately 3,000 people. The purchase price of the transaction is approximately $80 million, subject to customary adjustment. Completion of the transaction is expected in the fourth quarter, subject to the satisfaction of customary closing conditions.”

Article continues below advertisement

Performance of BorgWarner in 2Q16

BorgWarner (BWA) reported 2Q16 net sales of $2.3 billion, a rise of 15.0% compared to net sales of $2.0 billion in 2Q15. Sales of its Engine and Drivetrain segments rose 2.2% and 42.8%, respectively, in 2Q16 compared to 2Q15. The company’s gross profit margin and operating income rose 1.0% and 11.1%, respectively, in 2Q16 compared to 2Q15.

BWA’s net income and EPS (earnings per share) rose to $164.4 million and $0.76, respectively, in 2Q16, compared to $148.1 million and $0.65, respectively, in 2Q15. It reported non-GAAP[1. generally accepted accounting principles] EPS of $0.84 in 2Q16, a rise of 12.0% compared to 2Q15.

BWA’s cash fell 14.3% and its inventories rose 2.9% in 2Q16 compared to 4Q15. Its current ratio rose to 1.34x, and its long-term debt-to-equity ratio fell to 0.56x in 2Q16, compared to its current and long-term debt-to-equity ratios of 1.33x and 0.58x, respectively, in 4Q15.

Projections

BorgWarner (BWA) has made the following projections for 3Q16:

  • net sales growth in the range of 13.0%–20.8%
  • net sales growth in the range of 2.5%–7.7%, excluding the impact of foreign currencies and its Remy acquisition
  • EPS in the range of $0.74–$0.81, including ~$0.03 per share contributed by its Remy acquisition

The company has made the following projections for 2016:

  • net sales growth in the range of 13.7%–17.5%
  • net sales growth in the range of 3.0%–5.5%, excluding the impact of foreign currencies and its Remy acquisition
  • EPS in the range of $3.16–$3.32, including ~$0.12 per share contributed by its Remy acquisition

For an ongoing analysis of the consumer discretionary sector, please visit Market Realist’s Consumer Discretionary page.

Advertisement

More From Market Realist