BorgWarner (NYSE:BWA) Sets New 1-Year High After Strong Earnings

Key Points

• BorgWarner Inc. reached a new 52-week high of $37.39 after reporting better than expected quarterly earnings of $1.21 EPS, surpassing analysts' expectations of $1.06.
• The company announced a quarterly dividend increase from $0.11 to $0.17 per share, representing an annualized dividend yield of 1.8%.
• BorgWarner's Board has approved a $1 billion share buyback plan, allowing the company to repurchase about 13.2% of its outstanding shares, indicating management's belief that the stock is undervalued.

BorgWarner Inc. (NYSE:BWA - Get Free Report) reached a new 52-week high during mid-day trading on Friday after the company announced better than expected quarterly earnings. The company traded as high as $37.29 and last traded at $37.39, with a volume of 1415577 shares changing hands. The stock had previously closed at $36.80.

The auto parts company reported $1.21 earnings per share for the quarter, beating analysts' consensus estimates of $1.06 by $0.15. BorgWarner had a net margin of 2.06% and a return on equity of 16.13%. The firm had revenue of $3.64 billion during the quarter, compared to the consensus estimate of $3.56 billion. During the same period in the prior year, the firm earned $1.19 EPS. The company's revenue was up 1.0% compared to the same quarter last year.

BorgWarner Increases Dividend

The firm also recently declared a quarterly dividend, which will be paid on Monday, September 15th. Investors of record on Tuesday, September 2nd will be paid a dividend of $0.17 per share. This is a boost from BorgWarner's previous quarterly dividend of $0.11. This represents a $0.68 dividend on an annualized basis and a dividend yield of 1.8%. BorgWarner's dividend payout ratio is presently 35.20%.

BorgWarner announced that its Board of Directors has approved a share buyback plan on Thursday, July 31st that allows the company to buyback $1.00 billion in outstanding shares. This buyback authorization allows the auto parts company to purchase up to 13.2% of its stock through open market purchases. Stock buyback plans are generally a sign that the company's management believes its stock is undervalued.

Analyst Ratings Changes

BWA has been the topic of a number of recent research reports. Barclays restated an "overweight" rating and set a $45.00 price target (up from $42.00) on shares of BorgWarner in a research note on Wednesday, July 16th. Guggenheim dropped their price target on shares of BorgWarner from $38.00 to $33.00 and set a "buy" rating on the stock in a research note on Tuesday, April 22nd. UBS Group upped their price target on shares of BorgWarner from $35.00 to $38.00 and gave the company a "neutral" rating in a research note on Monday, July 14th. The Goldman Sachs Group raised shares of BorgWarner from a "neutral" rating to a "buy" rating and upped their target price for the stock from $31.00 to $34.00 in a report on Thursday, April 10th. Finally, Bank of America upped their target price on shares of BorgWarner from $35.00 to $41.00 and gave the stock a "buy" rating in a report on Monday, June 16th. Six investment analysts have rated the stock with a hold rating, ten have assigned a buy rating and one has given a strong buy rating to the stock. According to MarketBeat.com, the stock has a consensus rating of "Moderate Buy" and an average target price of $39.64.

Insider Activity

In other news, EVP Tonit M. Calaway sold 27,736 shares of the business's stock in a transaction that occurred on Monday, May 12th. The shares were sold at an average price of $32.83, for a total transaction of $910,572.88. Following the completion of the transaction, the executive vice president directly owned 214,521 shares of the company's stock, valued at $7,042,724.43. The trade was a 11.45% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which is available at the SEC website. Also, VP Isabelle Mckenzie sold 5,000 shares of the business's stock in a transaction that occurred on Friday, May 16th. The shares were sold at an average price of $33.25, for a total transaction of $166,250.00. Following the transaction, the vice president directly owned 63,445 shares of the company's stock, valued at $2,109,546.25. The trade was a 7.31% decrease in their ownership of the stock. The disclosure for this sale can be found here. 0.45% of the stock is currently owned by insiders.

Institutional Inflows and Outflows

Several hedge funds have recently made changes to their positions in the stock. Norges Bank bought a new stake in BorgWarner during the fourth quarter valued at about $62,180,000. Bank of America Corp DE boosted its position in shares of BorgWarner by 91.9% during the fourth quarter. Bank of America Corp DE now owns 3,878,932 shares of the auto parts company's stock worth $123,311,000 after acquiring an additional 1,857,907 shares during the last quarter. LSV Asset Management boosted its position in shares of BorgWarner by 36.7% during the first quarter. LSV Asset Management now owns 5,889,080 shares of the auto parts company's stock worth $168,722,000 after acquiring an additional 1,580,935 shares during the last quarter. Fuller & Thaler Asset Management Inc. boosted its position in shares of BorgWarner by 8,137.5% during the fourth quarter. Fuller & Thaler Asset Management Inc. now owns 1,299,057 shares of the auto parts company's stock worth $41,297,000 after acquiring an additional 1,283,287 shares during the last quarter. Finally, Millennium Management LLC boosted its position in shares of BorgWarner by 144.7% during the first quarter. Millennium Management LLC now owns 2,009,744 shares of the auto parts company's stock worth $57,579,000 after acquiring an additional 1,188,466 shares during the last quarter. 95.67% of the stock is owned by hedge funds and other institutional investors.

BorgWarner Trading Up 1.5%

The company has a debt-to-equity ratio of 0.65, a current ratio of 1.97 and a quick ratio of 1.60. The stock's 50-day moving average is $34.16 and its two-hundred day moving average is $31.18. The stock has a market cap of $8.21 billion, a P/E ratio of 29.92, a price-to-earnings-growth ratio of 1.60 and a beta of 1.09.

About BorgWarner

BorgWarner Inc, together with its subsidiaries, provides solutions for combustion, hybrid, and electric vehicles worldwide. It offers turbochargers, eBoosters, eTurbos, timing systems, emissions systems, thermal systems, gasoline ignition technology, smart remote actuators, powertrain sensors, cabin heaters, battery modules and systems, battery heaters, and battery charging.

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