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BorgWarner's (BWA) Q3 Earnings & Revenues Top Estimates

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BorgWarner Inc. (BWA - Free Report) delivered adjusted earnings of 96 cents per share in third-quarter 2019, beating the Zacks Consensus Estimate of 85 cents. This was mainly driven by revenue growth in the Drivetrain segment which amounted to $993 million, outpacing the Zacks Consensus Estimate of $964 million. However, the earnings per share came in lower than the $1 recorded in the year-ago quarter. Net income amounted to $194 million compared with the $204 million reported in the prior-year quarter.

BorgWarner’s net sales inched up 0.6% year over year to $2.49 billion, which beat the Zacks Consensus Estimate of $2.38 billion. The reported figure, however, fell nearly $66 million year over year, due to foreign currency fluctuations.

In the third quarter, operating income amounted to $276 million compared with the prior-year quarter’s figure of $278 million.

Segmental Performance

Net sales in the Engine segment fell to $1,514million fromthe prior-year quarter’s $1,516 million. Excluding impact of foreign-currency translation and divestiture of the thermostat product line, net sales went up4.6% year over year and adjusted EBIT (earnings before interest, income taxes and non-controlling interest) inched up 1.26% to $241 million. This was primarily aided by higher revenuesand the net impactof acquisitions and divestitures.

In the Drivetrain segment, net sales increased to $993 million from the $976 million reported in the prior-year quarter. Excluding impacts of foreign currencies, net sales were up 4.2% on a year-over-year basis and adjusted EBIT fell 7.4% to $100 million due to higher amount spent on research and development andstart-up costs for launches.

Financial Position

As of Sep 30, 2019, BorgWarner had $916 million in cash compared with $739 million as of Dec 31, 2018. Long-term debt was $1.66 billion, down from the $1.94 billion recorded at the end of 2018. The debt-to-capital ratio stands at 31.2%.

Net cash provided by operating activities was $824 million as of Sep 30, 2019 compared with $556 million as of Sep 30, 2018. Investment in capital expenditure, including tooling outlays, declined to $346 million from $394 million recorded as of Sep 30, 2018.

Outlook

For full-year 2019, the company’s net organic sales are likely to be down 1% to flat, with an estimated range of $9.95-$10.1 billion. Further, it envisions adjusted net earnings between $3.85 and $4 per diluted share. Further, adjusted operating margin is expected in the range of 11.7-12% and full-year free cash flow is estimated between $550 million and $600million.

Zacks Rank & Stocks to Consider

BorgWarner currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks include Kinross Gold Corporation (KGC - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Aaron's, Inc. (AAN - Free Report) and Alamos Gold Inc. (AGI - Free Report) , both carrying a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross Gold has an expected earnings growth rate of 210% for 2019. The company’s shares have soared 85.3% in the past year.

Aaron's has an estimated earnings growth rate of 17.56% for the ongoing year. The company’s shares have surged roughly 62.6% in a year’s time.

Alamos Gold has a projected earnings growth rate of a whopping 340% for the current year. Its shares have gained around 27% over the past year.

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