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What's in Store for BorgWarner (BWA) This Earnings Season?

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BorgWarner Inc. (BWA - Free Report) is slated to release third-quarter 2021 results on Nov 3, before the bell. The Zacks Consensus Estimate for the quarter’s earnings is pegged at 71 cents per share on revenues of $3.34 billion.

This automotive equipment supplier registered higher-than-anticipated earnings in the last reported quarter on better-than-projected revenues across all segments.

Over the preceding four quarters, the company exceeded estimates on all occasions, the average beat being 29.91%. This is depicted in the graph below:

BorgWarner Inc. Price and EPS Surprise

BorgWarner Inc. Price and EPS Surprise

BorgWarner Inc. price-eps-surprise | BorgWarner Inc. Quote

Trend in Estimate Revisions

The Zacks Consensus Estimate for BorgWarner’s third-quarter earnings per share has witnessed a downward revision of 6 cents to 79 cents in the past seven days. Moreover, this compares favorably with the year-ago quarter’s earnings of 88 cents per share, indicating a fall of 19.32%, year on year. Nonetheless, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year jump of 31.89%.

Earnings Whispers

Our proven Zacks model does not conclusively predict an earnings beat for BorgWarner this time around. The combination of a positive Earnings ESP, and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the odds of an earnings beat. However, that is not the case here as elaborated below.
 
Earnings ESP: BorgWarner has an Earnings ESP of -2.78%. This is because the Most Accurate Estimate is pegged 2 cents lower than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: BorgWarner, which shares space with ChargePoint Holdings (CHPT - Free Report) , BRP Inc (DOOO - Free Report) and Luminar Technologies (LAZR - Free Report) in the same industry, currently holds a Zacks Rank of 5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors at Play

The Zacks Consensus Estimate for BorgWarner’s Air Management segment’s sales is pegged at $1,621 million, for the period in discussion, suggesting a fall from the $1,854 million reported in the previous quarter. In addition, the consensus mark for the segment’s EBIT is pinned at $197 million, calling for a plunge from the $277 million seen in the second quarter.

The consensus mark for the third-quarter sales from the e-Propulsion & Drivetrain segment is pegged at $1,233 million, suggesting a drop from the $1,337 million registered in the last quarter. The same for the segmental EBIT is pinned at $110 million, indicating a slump from the prior quarter’s $132 million.

The consensus mark for the Fuel Injection unit’s quarterly sales is pegged at $421 million, calling for a decline from the $480 million witnessed in the prior quarter.

The consensus mark for quarterly sales from the Aftermarket unit is pinned at $191 million, indicating a fall from the $226 million recorded in the March-end quarter.

Thus, the projected decline in revenues and earnings across all major segments might have hurt the company’s performance during the quarter under review.