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BorgWarner (BWA) Stock Sinks As Market Gains: What You Should Know

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In the latest trading session, BorgWarner (BWA - Free Report) closed at $40.34, marking a -0.17% move from the previous day. This move lagged the S&P 500's daily gain of 0.84%. Elsewhere, the Dow gained 0.96%, while the tech-heavy Nasdaq added 0.81%.

Coming into today, shares of the auto parts supplier had gained 1.41% in the past month. In that same time, the Auto-Tires-Trucks sector gained 5.71%, while the S&P 500 gained 0.19%.

BorgWarner will be looking to display strength as it nears its next earnings release. On that day, BorgWarner is projected to report earnings of $0.89 per share, which would represent a year-over-year decline of 28.23%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $3.73 billion, down 8.11% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $3.76 per share and revenue of $15.22 billion. These totals would mark changes of -18.26% and -3.65%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for BorgWarner. These revisions help to show the ever-changing nature of near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 0.24% lower. BorgWarner currently has a Zacks Rank of #3 (Hold).

Valuation is also important, so investors should note that BorgWarner has a Forward P/E ratio of 10.76 right now. For comparison, its industry has an average Forward P/E of 14.67, which means BorgWarner is trading at a discount to the group.

Investors should also note that BWA has a PEG ratio of 0.9 right now. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Automotive - Original Equipment industry currently had an average PEG ratio of 0.71 as of yesterday's close.

The Automotive - Original Equipment industry is part of the Auto-Tires-Trucks sector. This group has a Zacks Industry Rank of 104, putting it in the top 42% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

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