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BorgWarner Declares Dividend of $0.14 Per Share

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Price movement

BorgWarner (BWA) has a market cap of $7.4 billion. It fell 3.8% to close at $34.03 per share on November 9, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -2.1%, -4.3%, and -21.3%, respectively, on the same day. BWA is trading 2.6% below its 20-day moving average, 2.8% below its 50-day moving average, and 0.59% above its 200-day moving average.

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Related ETF and peers

The Vanguard Large-Cap ETF (VV) invests 0.03% of its holdings in BorgWarner. The ETF tracks a market-cap-weighted index that covers 85% of the market capitalization of the US equity market. The YTD price movement of VV was 6.0% on November 9. The market caps of BorgWarner’s competitors are as follows:

  • Cummins (CMI) — $23.1 billion
  • Lear (LEA) — $8.3 billion
  • Tenneco (TEN) — $3.0 billion

BorgWarner’s rating

On November 9, 2016, Bank of America Merrill Lynch downgraded BorgWarner’s rating to “underperform” from “neutral,” and set the stock’s price target at $29 per share.

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BorgWarner declares dividend

BorgWarner has declared a quarterly cash dividend of $0.14 per share on its common stock. The dividend will be paid on December 15, 2016, to shareholders of record on December 1, 2016.

Performance of BorgWarner in 3Q16

BorgWarner reported 3Q16 net sales of $2.2 billion, a rise of 15.8% over the net sales of $1.9 billion in 3Q15. Sales of the Engine and Drivetrain segments rose 3.9% and 48.3%, respectively, between 3Q15 and 3Q16. The company’s gross profit margin expanded by 20 basis points, and its operating margin narrowed by 580 basis points.

Its net income and EPS (earnings per share) fell to $83.3 million and $0.39, respectively, in 3Q16, compared with $157.4 million and $0.70 in 3Q15. It reported non-GAAP (generally accepted accounting principles) EPS of $0.78 in 3Q16, a rise of 6.8% over 3Q15.

BWA’s cash and inventories fell 10.2% and 5.0%, respectively, between 4Q15 and 3Q16. Its current ratio rose to 1.35x, and its debt-to-equity ratio fell to 1.38x in 3Q16, compared with 1.33x and 1.43x, respectively, in 4Q15.

Projections

BorgWarner has made the following projections for fiscal 4Q16:

  • net sales growth of 14.3% to 17.8%
  • net sales growth of 3.0% to 5.0%, which excludes the impact of foreign currency and the Remy acquisition
  • EPS of $0.82 to $0.86, which includes ~$0.02 per share from the Remy acquisition

The company has made the following projections for fiscal 2016:

  • net sales growth of 15.2% to 16.0%
  • net sales growth of 4.3% to 4.8%, which excludes the impact of foreign currency and the Remy acquisition
  • EPS of $3.24 to $3.28, which includes ~$0.12 per share from the Remy acquisition

Next, we’ll discuss Flowers Foods (FLO).

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