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Why Is BorgWarner (BWA) Up 25.6% Since Last Earnings Report?
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A month has gone by since the last earnings report for BorgWarner (BWA - Free Report) . Shares have added about 25.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is BorgWarner due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
BorgWarner Delivers Weak Y/Y Results in Q1, Trims View
BorgWarner delivered adjusted earnings of 77 cents per share in first-quarter 2020, beating the Zacks Consensus Estimate of 49 cents. This was mainly aided by solid performance of the Engine segment. However, the reported figure came in lower than the year-ago quarter’s $1 per share. Net income amounted to $129 million compared with the $160 million reported in the prior-year quarter.
BorgWarner’s net sales slid 11.2% year over year to $2,279 million on unfavorable impact of foreign-currency fluctuations. The reported figure, however, beat the Zacks Consensus Estimate of $2,014 million.
In the first quarter, operating income amounted to $189 million compared with the prior-year quarter’s $264 million.
Segmental Performance
Net sales in the Engine segment fell to $1,434 million from the year-ago quarter’s $1,598 million. The figure, however, surpassed the Zacks Consensus Estimate of $1,411 million. Excluding impact of foreign-currency translation and divestiture of the thermostat product line, net sales were down 6.4% year over year and adjusted EBIT (earnings before interest, income taxes and non-controlling interest) dropped 11.3% to $212 million chiefly on lower revenues.
In the Drivetrain segment, net sales decreased to $860 million from the $982 million reported in the prior-year quarter. The figure also missed the Zacks Consensus Estimate of $891 million. Excluding the impact of foreign-currency translations, net sales declined 10.6%, year over year, and adjusted EBIT plunged 39% to $63 million on lower revenues, and higher net research and development spending.
Financial Position
As of Mar 31, 2020, BorgWarner had $901 million in cash compared with $832 million as of Dec 31, 2019. In the first quarter, long-term debt was $1,664 million, down from the $1,674 million recorded at the end of 2019. The long-term debt-to-capital ratio stands at 25.4%.
Net cash provided by operating activities was $263 million as of Mar 31, 2020, compared with $40 million as of Dec 31, 2019. Investment in capital expenditure, including tooling outlays, remained unchanged at $117 million in the March-end quarter.
Outlook
For full-year 2020, the company projects net sales of $7.25-$8 billion, down from the previous guidance of $9.75-$10.07 billion. Free cash flow is expected in the band of $100-$300 million in 2020, marking a decline from the prior guidance of $675-$725 million. Moreover, full-year operating cash flow is expected in the range of $530 million to $780 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -612.35% due to these changes.
VGM Scores
At this time, BorgWarner has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise BorgWarner has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is BorgWarner (BWA) Up 25.6% Since Last Earnings Report?
A month has gone by since the last earnings report for BorgWarner (BWA - Free Report) . Shares have added about 25.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is BorgWarner due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
BorgWarner Delivers Weak Y/Y Results in Q1, Trims View
BorgWarner delivered adjusted earnings of 77 cents per share in first-quarter 2020, beating the Zacks Consensus Estimate of 49 cents. This was mainly aided by solid performance of the Engine segment. However, the reported figure came in lower than the year-ago quarter’s $1 per share. Net income amounted to $129 million compared with the $160 million reported in the prior-year quarter.
BorgWarner’s net sales slid 11.2% year over year to $2,279 million on unfavorable impact of foreign-currency fluctuations. The reported figure, however, beat the Zacks Consensus Estimate of $2,014 million.
In the first quarter, operating income amounted to $189 million compared with the prior-year quarter’s $264 million.
Segmental Performance
Net sales in the Engine segment fell to $1,434 million from the year-ago quarter’s $1,598 million. The figure, however, surpassed the Zacks Consensus Estimate of $1,411 million. Excluding impact of foreign-currency translation and divestiture of the thermostat product line, net sales were down 6.4% year over year and adjusted EBIT (earnings before interest, income taxes and non-controlling interest) dropped 11.3% to $212 million chiefly on lower revenues.
In the Drivetrain segment, net sales decreased to $860 million from the $982 million reported in the prior-year quarter. The figure also missed the Zacks Consensus Estimate of $891 million. Excluding the impact of foreign-currency translations, net sales declined 10.6%, year over year, and adjusted EBIT plunged 39% to $63 million on lower revenues, and higher net research and development spending.
Financial Position
As of Mar 31, 2020, BorgWarner had $901 million in cash compared with $832 million as of Dec 31, 2019. In the first quarter, long-term debt was $1,664 million, down from the $1,674 million recorded at the end of 2019. The long-term debt-to-capital ratio stands at 25.4%.
Net cash provided by operating activities was $263 million as of Mar 31, 2020, compared with $40 million as of Dec 31, 2019. Investment in capital expenditure, including tooling outlays, remained unchanged at $117 million in the March-end quarter.
Outlook
For full-year 2020, the company projects net sales of $7.25-$8 billion, down from the previous guidance of $9.75-$10.07 billion. Free cash flow is expected in the band of $100-$300 million in 2020, marking a decline from the prior guidance of $675-$725 million. Moreover, full-year operating cash flow is expected in the range of $530 million to $780 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -612.35% due to these changes.
VGM Scores
At this time, BorgWarner has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% 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.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise BorgWarner has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.