A month has gone by since the last earnings report for BorgWarner (BWA Quick QuoteBWA - Free Report) . Shares have added about 32.4% in that time frame, outperforming the S&P 500.

But investors have to be wondering, 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 the latest earnings report in order to get a better handle on the important catalysts.

BorgWarner’s Q1 Earnings Beat Expectations

BorgWarner adjusted earnings of $1.24 per share in the first quarter of 2026, beating the Zacks Consensus Estimate of $1.16 by 6.83%. Revenues of $3.53 billion topped the Zacks Consensus Estimate of $3.47 billion by 1.74% and increased 0.5% year over year.

While reported sales benefited from stronger foreign currencies, organic net sales fell 4.2% from the year-ago quarter’s level. Disciplined cost controls and the exit of the charging business helped support profitability in a softer production environment.

BWA’s Margin Gains Offset Softer Organic Sales

Profits improved even though sales volumes were weak. On a U.S. GAAP basis, operating margin increased to 9.5% from 6.7% a year ago, while operating income rose from $237 million to $336 million. Gross margin also improved to 19.2% from 18.2%, aided by higher gross profit.

On an adjusted basis, operating margin reached 10.5%, up 50 basis points year over year, while adjusted operating income increased to $372 million from $352 million. Favorable currency movements, along with ongoing productivity gains and restructuring efforts, helped boost adjusted operating income compared with last year.

BorgWarner’s Segments Show Mixed Demand Patterns

Turbos & Thermal Technologies revenues declined 1.4% year over year to $1.43 billion, while segment adjusted operating income dropped to $214 million from $235 million. The decline was mainly due to weaker demand for some core thermal products, partially offset by currency tailwinds.

Drivetrain & Morse Systems continued to be a steadier contributor, with sales rising 4.5% to $1.42 billion and segment adjusted operating income improving to $260 million from $243 million.

PowerDrive Systems posted revenues of $587 million, up 4.6%. However, the segment still posted a loss, though it narrowed to $36 million from $43 million last year.

Battery Energy Systems sales dropped to $102 million from $150 million. However, the segment’s loss improved significantly, narrowing to $2 million from $22 million last year.

BWA Expands Portfolio With New Awards and Data Center Push

The company won 12 new business deals across different regions and products, including turbochargers, dual-clutch, variable cam timing systems, controllers for off-highway vehicles, electric motors and thermal systems for commercial vehicles. Many of these projects are expected to start production between 2026 and 2029, which should help support its long-term growth and profitability.

BWA is moving beyond light-vehicle content and expanding into data centers and other industrial markets. It plans to offer three main solutions — power generation, energy storage and power conversion.

The turbine generator system planned for launch in 2027 is on track and could generate more than $300 million in sales in its first year. Its battery storage systems and microgrid inverters are still being tested by customers and undergoing certification processes.

BorgWarner Returns Capital While Reaffirming 2026 Outlook

Shareholder returns remained a focus. BorgWarner returned about $185 million during the quarter, including $150 million in share repurchases and $35 million in dividends. The buybacks also reduced the share count, supporting EPS growth.

Cash generation improved from the prior-year quarter. Net cash provided by operating activities was $152 million compared with $82 million in the year-ago period. Capital expenditures amounted to $143 million versus $119 million a year ago. Free cash flow was $13 million versus an outflow of $35 million in the prior-year quarter.

For full-year 2026, BorgWarner anticipates net sales in the band of $14-$14.3 billion. Adjusted operating margin is expected in the band of 10.7-10.9%. Adjusted EPS is estimated to be in the range of $5-$5.20.

Operating cash flow is forecasted to be in the range of $1.6-$1.7 billion. Free cash flow is projected in the band of $900 million to $1.1 billion.

BWA’s Balance Sheet Reflects Continued Liquidity

BorgWarner had $2.11 billion in cash and cash equivalents as of March 31, 2026, down from $2.31 billion as of Dec. 31, 2025, reflecting net cash usage from financing activities tied to buybacks and dividends. Total assets were $13.65 billion as of March 31, 2026, compared with $13.77 billion as of Dec. 31, 2025.

Debt levels were broadly stable. Long-term debt was $3.88 billion as of March 31, 2026, slightly down from $3.89 billion as of Dec. 31, 2025. Liabilities amounted to $8.01 billion as of March 31, 2026, compared with $8.15 billion as of Dec. 31, 2025. Receivables increased to $3.09 billion from $2.96 billion, and inventories were essentially flat at $1.2 billion as of March 31, 2026.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a flat trend in estimates review.

VGM Scores

At this time, BorgWarner has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock has 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

BorgWarner has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

BorgWarner belongs to the Zacks Automotive - Original Equipment industry. Another stock from the same industry, Garrett Motion (GTX Quick QuoteGTX - Free Report) , has gained 21.6% over the past month. More than a month has passed since the company reported results for the quarter ended March 2026.

Garrett Motion reported revenues of $985 million in the last reported quarter, representing a year-over-year change of +12.2%. EPS of $0.49 for the same period compares with $0.30 a year ago.

Garrett Motion is expected to post earnings of $0.46 per share for the current quarter, representing a year-over-year change of +9.5%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.2%.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #1 (Strong Buy) for Garrett Motion. Also, the stock has a VGM Score of B.