We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
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.
Why Is BorgWarner (BWA) Down 0.1% Since Last Earnings Report?
Read MoreHide Full Article
It has been about a month since the last earnings report for BorgWarner (BWA - Free Report) . Shares have lost about 0.1% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is BorgWarner due for a breakout? 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.
BWA Tops Q2 Earnings Estimates
BorgWarner reported second-quarter 2026 adjusted earnings of $1.42 per share, which rose 17.4% year over year. The figure beat the Zacks Consensus Estimate of $1.26 by 12.7%. Net sales increased 0.3% to $3.65 billion and surpassed the consensus mark of $3.58 billion by 1.8%.
Strong cost controls supported profitability despite lower industry production and weakness in the Battery Energy Systems business. Adjusted operating margin expanded 100 basis points to 11.3%, while organic sales declined 1.2%.
Gross profit rose to $721 million from $640 million in the year-ago quarter. Gross margin improved to 19.8% from 17.6%, reflecting lower cost of sales and disciplined operating execution. Adjusted operating income increased to $413 million from $373 million.
Segmental Performance
Turbos & Thermal Technologies sales declined 2.6% year over year to $1.44 billion amid lower industry production. Organic sales fell 4.3%. Segment adjusted operating income slipped to $225 million from $227 million.
Drivetrain & Morse Systems revenues increased 1.8% to $1.5 billion, aided by strong North American transfer-case volumes. Adjusted operating income rose to $277 million from $260 million, supported by higher sales and operating execution.
PowerDrive Systems sales grew 14.5% to $665 million, including organic growth of 11.7%. Its adjusted operating loss narrowed to $29 million from $33 million, driven by higher sales.
Battery Energy Systems revenues plunged 37.1% to $100 million due to weaker European demand and the absence of North American incentives. However, the segment’s adjusted operating loss narrowed to $2 million from $12 million, helped by restructuring actions and savings from the charging-business exit.
New Business Pipeline
BorgWarner announced seven awards spanning combustion, hybrid and electric-vehicle technologies. These included an eTurbo program for a European automaker, a torque-on-demand transfer case for a Chinese SUV and two variable cam timing programs.
The company also secured an integrated drive module award using its next-generation three-in-one system. Two high-volume inverter program extensions cover plug-in hybrid and 800-volt battery-electric applications. Production for the announced programs is scheduled to begin between late 2026 and 2029.
BorgWarner Advances Industrial Products
The company noted progress in data-center and industrial applications. Testing of its turbine generator achieved California Air Resources Board-level emissions standards, while component certification work is expected to begin in September.
BorgWarner continues to target a 2027 launch and had previously outlined roughly $300 million of turbine-generator revenues for that year. Customer interest includes multiple hyperscalers, and management expects to decide during the second half of 2026 whether additional capacity is needed.
BorgWarner is also developing energy-storage systems, microgrid inverters and power-conversion products. Four customers have received inverter samples, and the company is expanding its portfolio from 400 volts to 1,500 volts. It plans to invest an additional $10-$15 million in industrial research and development during the second half.
2026 Earnings View Raised
BWA raised its full-year adjusted earnings guidance to $5.05-$5.30 per share from $5-$5.20. The company maintained its sales outlook of $14-$14.3 billion and adjusted operating margin forecast of 10.7%-10.9%. Organic revenues are expected to decline 1.5%-3.5%, including an anticipated $250 million reduction in Battery Energy Systems sales.
Cash Flow Supports Buybacks
Second-quarter operating cash flow totaled $586 million, while free cash flow was $492 million. For 2026, the company continues to expect operating cash flow of $1.6-$1.7 billion and free cash flow of $900 million-$1.1 billion.
BorgWarner returned about $134 million to shareholders during the quarter through repurchases and dividends. Its board increased the share repurchase authorization by $1 billion, bringing total available authorization to approximately $1.35 billion through 2029. Cash and equivalents were $2.45 billion as of June 30, 2026.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, BorgWarner has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a grade of A on the value side, putting it in the top 20% 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. Interestingly, 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 is part of the Zacks Automotive - Original Equipment industry. Over the past month, Lear (LEA - Free Report) , a stock from the same industry, has gained 10.1%. The company reported its results for the quarter ended June 2026 more than a month ago.
Lear reported revenues of $6.21 billion in the last reported quarter, representing a year-over-year change of +3%. EPS of $4.28 for the same period compares with $3.47 a year ago.
For the current quarter, Lear is expected to post earnings of $3.28 per share, indicating a change of +17.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.7% over the last 30 days.
Lear has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
View the Zacks #1 Rank List
Image: Bigstock
Why Is BorgWarner (BWA) Down 0.1% Since Last Earnings Report?
It has been about a month since the last earnings report for BorgWarner (BWA - Free Report) . Shares have lost about 0.1% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is BorgWarner due for a breakout? 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.
BWA Tops Q2 Earnings Estimates
BorgWarner reported second-quarter 2026 adjusted earnings of $1.42 per share, which rose 17.4% year over year. The figure beat the Zacks Consensus Estimate of $1.26 by 12.7%. Net sales increased 0.3% to $3.65 billion and surpassed the consensus mark of $3.58 billion by 1.8%.
Strong cost controls supported profitability despite lower industry production and weakness in the Battery Energy Systems business. Adjusted operating margin expanded 100 basis points to 11.3%, while organic sales declined 1.2%.
Gross profit rose to $721 million from $640 million in the year-ago quarter. Gross margin improved to 19.8% from 17.6%, reflecting lower cost of sales and disciplined operating execution. Adjusted operating income increased to $413 million from $373 million.
Segmental Performance
Turbos & Thermal Technologies sales declined 2.6% year over year to $1.44 billion amid lower industry production. Organic sales fell 4.3%. Segment adjusted operating income slipped to $225 million from $227 million.
Drivetrain & Morse Systems revenues increased 1.8% to $1.5 billion, aided by strong North American transfer-case volumes. Adjusted operating income rose to $277 million from $260 million, supported by higher sales and operating execution.
PowerDrive Systems sales grew 14.5% to $665 million, including organic growth of 11.7%. Its adjusted operating loss narrowed to $29 million from $33 million, driven by higher sales.
Battery Energy Systems revenues plunged 37.1% to $100 million due to weaker European demand and the absence of North American incentives. However, the segment’s adjusted operating loss narrowed to $2 million from $12 million, helped by restructuring actions and savings from the charging-business exit.
New Business Pipeline
BorgWarner announced seven awards spanning combustion, hybrid and electric-vehicle technologies. These included an eTurbo program for a European automaker, a torque-on-demand transfer case for a Chinese SUV and two variable cam timing programs.
The company also secured an integrated drive module award using its next-generation three-in-one system. Two high-volume inverter program extensions cover plug-in hybrid and 800-volt battery-electric applications. Production for the announced programs is scheduled to begin between late 2026 and 2029.
BorgWarner Advances Industrial Products
The company noted progress in data-center and industrial applications. Testing of its turbine generator achieved California Air Resources Board-level emissions standards, while component certification work is expected to begin in September.
BorgWarner continues to target a 2027 launch and had previously outlined roughly $300 million of turbine-generator revenues for that year. Customer interest includes multiple hyperscalers, and management expects to decide during the second half of 2026 whether additional capacity is needed.
BorgWarner is also developing energy-storage systems, microgrid inverters and power-conversion products. Four customers have received inverter samples, and the company is expanding its portfolio from 400 volts to 1,500 volts. It plans to invest an additional $10-$15 million in industrial research and development during the second half.
2026 Earnings View Raised
BWA raised its full-year adjusted earnings guidance to $5.05-$5.30 per share from $5-$5.20. The company maintained its sales outlook of $14-$14.3 billion and adjusted operating margin forecast of 10.7%-10.9%. Organic revenues are expected to decline 1.5%-3.5%, including an anticipated $250 million reduction in Battery Energy Systems sales.
Cash Flow Supports Buybacks
Second-quarter operating cash flow totaled $586 million, while free cash flow was $492 million. For 2026, the company continues to expect operating cash flow of $1.6-$1.7 billion and free cash flow of $900 million-$1.1 billion.
BorgWarner returned about $134 million to shareholders during the quarter through repurchases and dividends. Its board increased the share repurchase authorization by $1 billion, bringing total available authorization to approximately $1.35 billion through 2029. Cash and equivalents were $2.45 billion as of June 30, 2026.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, BorgWarner has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock has a grade of A on the value side, putting it in the top 20% 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. Interestingly, 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 is part of the Zacks Automotive - Original Equipment industry. Over the past month, Lear (LEA - Free Report) , a stock from the same industry, has gained 10.1%. The company reported its results for the quarter ended June 2026 more than a month ago.
Lear reported revenues of $6.21 billion in the last reported quarter, representing a year-over-year change of +3%. EPS of $4.28 for the same period compares with $3.47 a year ago.
For the current quarter, Lear is expected to post earnings of $3.28 per share, indicating a change of +17.6% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.7% over the last 30 days.
Lear has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.