We assign a fundamental rating of 6 out of 10 to BWA. BWA was compared to 42 industry peers in the Automobile Components industry. BWA has an average financial health and profitability rating. A decent growth rate in combination with a cheap valuation! Better keep an eye on BWA. This makes BWA very considerable for value investing!

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

BWA had positive earnings in the past year.
BWA had a positive operating cash flow in the past year.
Each year in the past 5 years BWA has been profitable.
In the past 5 years BWA always reported a positive cash flow from operatings.

1.2 Ratios

BWA has a Return On Assets (0.92%) which is in line with its industry peers.
BWA has a Return On Equity (2.24%) which is comparable to the rest of the industry.
BWA has a Return On Invested Capital of 9.21%. This is amongst the best in the industry. BWA outperforms 83.33% of its industry peers.
The Average Return On Invested Capital over the past 3 years for BWA is in line with the industry average of 9.10%.
The last Return On Invested Capital (9.21%) for BWA is above the 3 year average (8.99%), which is a sign of increasing profitability.

		Industry Rank	Sector Rank
ROA	0.92%
ROE	2.24%
ROIC	9.21%

ROA(3y)4.1%

ROA(5y)3.73%

ROE(3y)9.97%

ROE(5y)9.08%

ROIC(3y)8.99%

ROIC(5y)8.17%

1.3 Margins

BWA has a Profit Margin (0.94%) which is comparable to the rest of the industry.
BWA's Profit Margin has declined in the last couple of years.
With an excellent Operating Margin value of 9.59%, BWA belongs to the best of the industry, outperforming 83.33% of the companies in the same industry.
BWA's Operating Margin has declined in the last couple of years.
BWA's Gross Margin of 18.78% is in line compared to the rest of the industry. BWA outperforms 45.24% of its industry peers.
BWA's Gross Margin has declined in the last couple of years.

		Industry Rank	Sector Rank
OM	9.59%
PM (TTM)	0.94%
GM	18.78%

OM growth 3Y-0.75%

OM growth 5Y-5.01%

PM growth 3Y-12.8%

PM growth 5Y-20.03%

GM growth 3Y-0.77%

GM growth 5Y-1.87%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

BWA has a Return on Invested Capital (ROIC), which is just above the Cost of Capital (WACC), which means it is creating some value.
Compared to 1 year ago, BWA has less shares outstanding
The number of shares outstanding for BWA has been increased compared to 5 years ago.
BWA has a worse debt/assets ratio than last year.

2.2 Solvency

BWA has an Altman-Z score of 2.97. This is not the best score and indicates that BWA is in the grey zone with still only limited risk for bankruptcy at the moment.
BWA has a Altman-Z score of 2.97. This is in the better half of the industry: BWA outperforms 61.90% of its industry peers.
BWA has a debt to FCF ratio of 3.15. This is a good value and a sign of high solvency as BWA would need 3.15 years to pay back of all of its debts.
BWA's Debt to FCF ratio of 3.15 is fine compared to the rest of the industry. BWA outperforms 78.57% of its industry peers.
BWA has a Debt/Equity ratio of 0.65. This is a neutral value indicating BWA is somewhat dependend on debt financing.
With a Debt to Equity ratio value of 0.65, BWA perfoms like the industry average, outperforming 47.62% of the companies in the same industry.

		Industry Rank	Sector Rank
Debt/Equity	0.65
Debt/FCF	3.15
Altman-Z	2.97

ROIC/WACC1.16

WACC7.97%

2.3 Liquidity

A Current Ratio of 2.05 indicates that BWA has no problem at all paying its short term obligations.
With a decent Current ratio value of 2.05, BWA is doing good in the industry, outperforming 61.90% of the companies in the same industry.
A Quick Ratio of 1.69 indicates that BWA should not have too much problems paying its short term obligations.
BWA has a Quick ratio of 1.69. This is in the better half of the industry: BWA outperforms 76.19% of its industry peers.

		Industry Rank	Sector Rank
Current Ratio	2.05
Quick Ratio	1.69

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WACC

Debt/Equity

How to determine the health of a company

Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has grown by an nice 8.55% over the past year.
The Earnings Per Share has been growing slightly by 0.90% on average over the past years.
The Revenue has been growing slightly by 0.10% in the past year.
BWA shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 6.74% yearly.

EPS 1Y (TTM)8.55%

EPS 3Y1.35%

EPS 5Y0.9%

EPS Q2Q%13.76%

Revenue 1Y (TTM)0.1%

Revenue growth 3Y-1.72%

Revenue growth 5Y6.74%

Sales Q2Q%4.12%

3.2 Future

The Earnings Per Share is expected to grow by 6.15% on average over the next years.
BWA is expected to show a small growth in Revenue. In the coming years, the Revenue will grow by 3.10% yearly.

EPS Next Y10.7%

EPS Next 2Y10.02%

EPS Next 3Y10%

EPS Next 5Y6.15%

Revenue Next Year0.98%

Revenue Next 2Y2.05%

Revenue Next 3Y2.22%

Revenue Next 5Y3.1%

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.

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4. Valuation

4.1 Price/Earnings Ratio

Based on the Price/Earnings ratio of 10.60, the valuation of BWA can be described as reasonable.
Based on the Price/Earnings ratio, BWA is valued cheaper than 83.33% of the companies in the same industry.
BWA is valuated cheaply when we compare the Price/Earnings ratio to 28.87, which is the current average of the S&P500 Index.
A Price/Forward Earnings ratio of 9.26 indicates a reasonable valuation of BWA.
Based on the Price/Forward Earnings ratio, BWA is valued cheaply inside the industry as 80.95% of the companies are valued more expensively.
BWA is valuated cheaply when we compare the Price/Forward Earnings ratio to 25.96, which is the current average of the S&P500 Index.

		Industry Rank	Sector Rank
PE	10.6
Fwd PE	9.26

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, BWA is valued cheaper than 83.33% of the companies in the same industry.
85.71% of the companies in the same industry are more expensive than BWA, based on the Price/Free Cash Flow ratio.

		Industry Rank	Sector Rank
P/FCF	8.36
EV/EBITDA	5.71

4.3 Compensation for Growth

BWA's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
BWA has a very decent profitability rating, which may justify a higher PE ratio.

PEG (NY)0.99

PEG (5Y)11.73

EPS Next 2Y10.02%

EPS Next 3Y10%

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5. Dividend

5.1 Amount

With a Yearly Dividend Yield of 1.42%, BWA has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 0.61, BWA pays a bit more dividend than its industry peers.
Compared to the average S&P500 Dividend Yield of 1.82, BWA is paying slightly less dividend.

		Industry Rank	Sector Rank
Dividend Yield	1.42%

5.2 History

The dividend of BWA decreases each year by -8.36%.
BWA has paid a dividend for at least 10 years, which is a reliable track record.

Dividend Growth(5Y)-8.36%

Div Incr Years0

Div Non Decr Years0

5.3 Sustainability

BWA pays out 80.60% of its income as dividend. This is not a sustainable payout ratio.

DP80.6%

EPS Next 2Y10.02%

EPS Next 3Y10%

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BORGWARNER INC / BWA FAQ

Can you provide the ChartMill fundamental rating for BORGWARNER INC?

ChartMill assigns a fundamental rating of 6 / 10 to BWA.

What is the valuation status for BWA stock?

ChartMill assigns a valuation rating of 8 / 10 to BORGWARNER INC (BWA). This can be considered as Undervalued.

Can you provide the profitability details for BORGWARNER INC?

BORGWARNER INC (BWA) has a profitability rating of 6 / 10.

What are the PE and PB ratios of BORGWARNER INC (BWA) stock?

The Price/Earnings (PE) ratio for BORGWARNER INC (BWA) is 10.6 and the Price/Book (PB) ratio is 1.73.

Is the dividend of BORGWARNER INC sustainable?

The dividend rating of BORGWARNER INC (BWA) is 3 / 10 and the dividend payout ratio is 80.6%.