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BorgWarner Inc. (BWA), headquartered in Auburn Hills, Michigan, is a leading automotive supplier that provides solutions for combustion, hybrid, and electric vehicles. With a market cap of $7 billion, their offerings cater to original equipment manufacturers (OEMs) of light vehicles comprising passenger cars, SUVs, vans, and light trucks, and commercial vehicles, including medium and heavy-duty trucks and buses.
Companies worth $2 billion or more are generally described as “mid-cap stocks,” and BWA fits right into that category with its market cap exceeding this threshold, reflecting its substantial size, influence, and dominance in the auto parts industry. BWA’s strong focus on electrification, and its diversified product portfolio, with a global manufacturing footprint and solid R&D capabilities, has solidified its competitive edge in the industry.
Despite its notable strength, BWA slipped 15.8% from its 52-week high of $38.23, achieved on May 14. Over the past three months, BWA stock fell 12.4%, underperforming the Nasdaq Composite’s ($NASX) 8.8% gains during the same time frame.
In the longer term, BWA shares rose marginally over the past six months but dipped 10.2% over the past 52 weeks, considerably underperforming NASX’s six-month gains of 10.4% and 30.6% returns over the last year.
To confirm the bearish trend, the stock is trading below its 50-day and 200-day moving averages since mid-December.
BWA has underperformed due to a decline in vehicle production, influenced by automakers struggling with reduced consumer demand amid persistent inflation and intense competition from Chinese companies giving out more affordable electric vehicles.
On Oct. 31, BWA shares closed up marginally after reporting its Q3 results. The company’s total revenues of $3.45 billion, fell short of Wall Street forecasts of $3.53 billion. Its adjusted EPS was $1.09, surpassing analyst estimates of $0.92. BWA expects full-year adjusted EPS to be between $4.15 and $4.30, and expects revenue to be between $14 billion and $14.2 billion.
BWA’s rival, American Axle & Manufacturing Holdings, Inc. (AXL) shares have lagged behind the stock, with a 15.1% dip over the past six months and 34.4% losses over the past 52 weeks.
Wall Street analysts are moderately bullish on BWA’s prospects. The stock has a consensus “Moderate Buy” rating from the 17 analysts covering it, and the mean price target of $40.81 suggests a potential upside of 26.8% from current price levels.
