We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
BorgWarner (BWA) Up 2.8% Since Earnings Report: Can It Continue?
Read MoreHide Full Article
A month has gone by since the last earnings report for BorgWarner Inc. (BWA - Free Report) . Shares have added about 2.8% in that time frame, underperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
BorgWarner Beats on Q4 Earnings, Misses on Revenues
BorgWarner reported adjusted earnings of $0.85 per share in the fourth quarter of 2016, marginally beating the Zacks Consensus Estimate of $0.84. Adjusted earnings increased from $0.77 per share reported in the year-ago quarter. Including the impact of non-comparable items, BorgWarner recorded loss of $293 million or $1.39 per share in fourth quarter of 2016, versus earnings of $125 million or $0.56 per share reported a year ago.
Revenues increased 6.4% year over year to $2.26 billion, missing the Zacks Consensus Estimate of $2.30 billion. Excluding the impact of foreign currencies and the Remy International acquisition, net revenues went up 6.6% year over year.
Operating loss amounted to $458 million versus operating income of $200.5 million in the fourth quarter of 2015. Adjusted operating income came in at $284 million, or 12.6% of net sales.
2016 Results
BorgWarner recorded adjusted earnings of $3.27 per share in 2016, beating the Zacks Consensus Estimate of $3.26. In comparison, the company had generated earnings of $3.04 per share in 2015.
Net income (on a reported basis) amounted to $119 million or $0.55 per share, compared with $610 million or $2.70 per share in 2015.
Revenues increased 13.1% to $9.07 billion from $8.02 billion in 2015. However, the figure missed the Zacks Consensus Estimate of $9.11 billion. Excluding the impact of foreign currencies and the Remy International acquisition, revenues went up 5.2% year over year.
Segment Details
Revenues in the Engine segment dipped 0.7% year over year to $1.39 billion. Excluding the impact of foreign currencies, net sales went up 1.3% in the segment.
Adjusted earnings before interest, income taxes and non-controlling interest (adjusted EBIT) improved to $247.7 million in the reported quarter from $230.4 million a year ago.
Revenues in the Drivetrain segment grew 20.1% to $883 million. Excluding the impact of foreign currencies and the Remy International acquisition, net sales rose 16.9% year over year. Adjusted EBIT improved to $91 million from $81.2 million in the fourth quarter of 2015.
Financial Position
BorgWarner had $443.7 million in cash as of Dec 31, 2016, compared with $577.7 million as of Dec 31, 2015. Total debt, including notes payable, was $2.22 billion as of Dec 31, 2016, compared with $2.55 billion as of Dec 31, 2015.
In 2016, net cash from operating activities increased to $1.04 billion from $868 million in the year-ago period. Capital expenditures, including tooling outlays, fell to $501 million from $577 million in 2015.
Outlook
Net sales growth for first quarter of 2017 is projected in the range of 2.5–6.5%. The Remy light vehicle aftermarket sale is expected to have a negative impact of $70 million. Also, foreign currencies are expected to have a negative impact of $60 million or 2.7%.
Net earnings for the first quarter of 2017 are expected in the band of $0.81–$0.85 per share.
For 2017, the company expects net sales of around $8.81–$9.04 billion, which translates into organic growth rate of 3.5–6%. The company expects negative impact of foreign currencies due to the depreciation of the Euro, Yuan and Pound of $320 million. Also, a negative impact of around $235 million due to the sale of the Remy light vehicle aftermarket business is expected by the company.
Further, BorgWarner expects net earnings in the range of $3.35–$3.45 per share in 2017. Operating margin for 2017 is expected to improve by 40 to 50 basis points.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, BorgWarner's stock has a great Growth Score of 'A', though it is lagging a bit on the momentum front with a 'B'. Charting a somewhat similar path, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for growth investors than value and momentum investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
BorgWarner (BWA) Up 2.8% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for BorgWarner Inc. (BWA - Free Report) . Shares have added about 2.8% in that time frame, underperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
BorgWarner Beats on Q4 Earnings, Misses on Revenues
BorgWarner reported adjusted earnings of $0.85 per share in the fourth quarter of 2016, marginally beating the Zacks Consensus Estimate of $0.84. Adjusted earnings increased from $0.77 per share reported in the year-ago quarter. Including the impact of non-comparable items, BorgWarner recorded loss of $293 million or $1.39 per share in fourth quarter of 2016, versus earnings of $125 million or $0.56 per share reported a year ago.
Revenues increased 6.4% year over year to $2.26 billion, missing the Zacks Consensus Estimate of $2.30 billion. Excluding the impact of foreign currencies and the Remy International acquisition, net revenues went up 6.6% year over year.
Operating loss amounted to $458 million versus operating income of $200.5 million in the fourth quarter of 2015. Adjusted operating income came in at $284 million, or 12.6% of net sales.
2016 Results
BorgWarner recorded adjusted earnings of $3.27 per share in 2016, beating the Zacks Consensus Estimate of $3.26. In comparison, the company had generated earnings of $3.04 per share in 2015.
Net income (on a reported basis) amounted to $119 million or $0.55 per share, compared with $610 million or $2.70 per share in 2015.
Revenues increased 13.1% to $9.07 billion from $8.02 billion in 2015. However, the figure missed the Zacks Consensus Estimate of $9.11 billion. Excluding the impact of foreign currencies and the Remy International acquisition, revenues went up 5.2% year over year.
Segment Details
Revenues in the Engine segment dipped 0.7% year over year to $1.39 billion. Excluding the impact of foreign currencies, net sales went up 1.3% in the segment.
Adjusted earnings before interest, income taxes and non-controlling interest (adjusted EBIT) improved to $247.7 million in the reported quarter from $230.4 million a year ago.
Revenues in the Drivetrain segment grew 20.1% to $883 million. Excluding the impact of foreign currencies and the Remy International acquisition, net sales rose 16.9% year over year. Adjusted EBIT improved to $91 million from $81.2 million in the fourth quarter of 2015.
Financial Position
BorgWarner had $443.7 million in cash as of Dec 31, 2016, compared with $577.7 million as of Dec 31, 2015. Total debt, including notes payable, was $2.22 billion as of Dec 31, 2016, compared with $2.55 billion as of Dec 31, 2015.
In 2016, net cash from operating activities increased to $1.04 billion from $868 million in the year-ago period. Capital expenditures, including tooling outlays, fell to $501 million from $577 million in 2015.
Outlook
Net sales growth for first quarter of 2017 is projected in the range of 2.5–6.5%. The Remy light vehicle aftermarket sale is expected to have a negative impact of $70 million. Also, foreign currencies are expected to have a negative impact of $60 million or 2.7%.
Net earnings for the first quarter of 2017 are expected in the band of $0.81–$0.85 per share.
For 2017, the company expects net sales of around $8.81–$9.04 billion, which translates into organic growth rate of 3.5–6%. The company expects negative impact of foreign currencies due to the depreciation of the Euro, Yuan and Pound of $320 million. Also, a negative impact of around $235 million due to the sale of the Remy light vehicle aftermarket business is expected by the company.
Further, BorgWarner expects net earnings in the range of $3.35–$3.45 per share in 2017. Operating margin for 2017 is expected to improve by 40 to 50 basis points.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
BorgWarner Inc. Price and Consensus
BorgWarner Inc. Price and Consensus | BorgWarner Inc. Quote
VGM Scores
At this time, BorgWarner's stock has a great Growth Score of 'A', though it is lagging a bit on the momentum front with a 'B'. Charting a somewhat similar path, the stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for growth investors than value and momentum investors.
Outlook
The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.