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BorgWarner Will Supply Plugs for SsangYong Motor’s Vehicles

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Price movement

BorgWarner (BWA) rose by 0.26% to close at $35.18 per share during the fourth week of September 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were 0.26%, 2.3%, and -17.7%, respectively, on September 30.

BWA is trading 0.84% above its 20-day moving average, 3.3% above its 50-day moving average, and 3.1% above its 200-day moving average.

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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 such as sales, book value, and cash flows. The YTD price movement of FTA was 10.8% on September 30, 2016.

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 September 29, 2016, BorgWarner reported, “BorgWarner supplies its advanced diesel cold-start system with ceramic glow plugs [CGPs] and glow plug control module for SsangYong’s new 1.6-liter and 2.2-liter DTX engines.”

The release continued, “Featuring BorgWarner’s fast-heating diesel cold-start technology, the glow plugs help optimize combustion for several vehicles from leading South Korean automaker SsnagYong, including the all-new compact Tivoli SUV as well as the Korando and Korando Sport. Equipped with a stop/start function, all models are planned for release in Europe and North America.”

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Performance of BorgWarner in 2Q16

BorgWarner 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 the prior year’s period.

The company’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 (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 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, visit Market Realist’s Consumer Discretionary page.

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