BorgWarner (NYSE:BWA) Issues Earnings Results

Key Points

• BorgWarner beat earnings expectations: Third-quarter EPS was $1.39 versus the $1.25 consensus, while adjusted operating margin expanded to 10.9% and free cash flow reached $195 million. Revenue of $3.49 billion slightly missed estimates and declined 2.9% year over year.
• Management raised full-year adjusted EPS guidance to $5.20–$5.35 from $5.05–$5.30, while maintaining its operating-margin outlook and announcing plans to return more than $700 million to shareholders in 2026.
• Electrification growth remains a focus, with eProduct sales up 33% and nine new awards secured, but weaker European battery demand and limited North American incentives are expected to weigh on full-year sales, now forecast at $14.0–$14.2 billion.

BorgWarner (NYSE:BWA - Get Free Report) posted its earnings results on Thursday. The auto parts company reported $1.39 earnings per share for the quarter, topping the consensus estimate of $1.25 by $0.14, Zacks reports. BorgWarner had a net margin of 2.89% and a return on equity of 19.10%. The firm had revenue of $3.49 billion during the quarter, compared to the consensus estimate of $3.50 billion. During the same quarter last year, the company earned $1.24 earnings per share. The company's revenue was down 2.9% on a year-over-year basis.

Here are the key takeaways from BorgWarner's conference call:

• BorgWarner reported a strong third quarter despite lower vehicle production, with adjusted operating margin expanding 20 basis points to 10.9% and adjusted EPS rising 12% year over year. Free cash flow was $195 million.
• Light-vehicle eProduct sales increased 33% to $630 million, primarily driven by Europe, while the company secured nine new awards spanning combustion, hybrid, and battery-electric applications, including aluminum-wire motors and next-generation inverters.
• Management raised full-year adjusted EPS guidance to $5.20–$5.35 from $5.05–$5.30, maintained its 10.7%–10.9% operating-margin outlook, and expects to return more than $700 million to shareholders in 2026 through dividends and buybacks.
• Full-year sales guidance was narrowed to $14.0 billion–$14.2 billion, with organic sales expected to decline 2.5%–4%; the battery business is expected to remain a significant headwind because of weaker European demand and the lack of North American incentives.
• Data-center initiatives continued to advance: turbine-generator production trials are expected by year-end, microgrid inverter samples have shipped to seven customers, and initial quoting has begun. Management expects approximately $300 million of turbine-generator revenue in 2027, although it will provide more detail only in early 2027.

BorgWarner Price Performance

Shares of NYSE:BWA traded down $2.58 during trading on Thursday, reaching $53.35. The company had a trading volume of 4,416,094 shares, compared to its average volume of 2,744,320. The company has a fifty day moving average of $61.83 and a two-hundred day moving average of $60.49. The stock has a market capitalization of $10.87 billion, a P/E ratio of 26.68, a price-to-earnings-growth ratio of 0.81 and a beta of 1.16. BorgWarner has a 12 month low of $40.73 and a 12 month high of $78.82. The company has a current ratio of 2.13, a quick ratio of 1.76 and a debt-to-equity ratio of 0.67.

BorgWarner News Roundup

Here are the key news stories impacting BorgWarner this week:

• Positive Sentiment: BorgWarner reported third-quarter adjusted EPS of $1.39, above the $1.24-$1.25 analyst consensus and up from $1.24 a year earlier. Cost reductions, share repurchases and improved profitability helped support the earnings beat. BorgWarner Tops Q3 Earnings Estimates
• Positive Sentiment: The company increased its 2026 adjusted EPS guidance, indicating confidence in continued cost controls and operational execution. Management also announced nine new awards across its portfolio, including turbo, eMotor and high-voltage inverter programs, supporting its longer-term electrification and powertrain growth strategy. BorgWarner Reports Third-Quarter Results and New Awards
• Positive Sentiment: New business wins in China and a high-voltage inverter award strengthen BorgWarner’s position in electric-vehicle components. A silicon-carbide supply arrangement involving Wolfspeed also supports the company’s inverter offerings. BorgWarner Secures High-Voltage Inverter Business
• Neutral Sentiment: Bank of America raised its BorgWarner price target to $85 from $78, providing a favorable analyst signal, although the target change may not offset concerns about near-term operating trends. BofA Raises BorgWarner Price Target
• Negative Sentiment: Revenue was $3.49 billion, slightly below the $3.50 billion consensus and down 2.9% year over year. The sales decline, attributed to lower volumes, overshadowed the EPS beat and highlighted weaker underlying demand in the auto industry. BorgWarner Q3 Profit Improves but Sales Drop

BorgWarner declared that its Board of Directors has approved a share buyback program on Wednesday, August 5th that authorizes the company to buy back $1 billion in outstanding shares. This repurchase authorization authorizes the auto parts company to purchase up to 7.7% of its stock through open market purchases. Share repurchase programs are usually a sign that the company's board believes its stock is undervalued.

Analyst Upgrades and Downgrades

BWA has been the subject of several analyst reports. Robert W. Baird set a $79.00 price objective on shares of BorgWarner in a report on Thursday, August 6th. Deutsche Bank Aktiengesellschaft set a $80.00 target price on BorgWarner in a research report on Thursday, August 6th. Royal Bank Of Canada began coverage on BorgWarner in a report on Monday, August 31st. They issued an "outperform" rating and a $87.00 price target for the company. Bank of America upgraded BorgWarner from a "neutral" rating to a "buy" rating and lifted their price target for the company from $78.00 to $85.00 in a research report on Thursday, October 15th. Finally, Barclays boosted their price objective on BorgWarner from $83.00 to $85.00 and gave the company an "overweight" rating in a research note on Monday, August 10th. Ten analysts have rated the stock with a Buy rating and four have assigned a Hold rating to the company. According to data from MarketBeat, the company currently has a consensus rating of "Moderate Buy" and an average price target of $79.00.

Insider Activity

In related news, Director Rajesh Kalathur bought 7,407 shares of the business's stock in a transaction that occurred on Wednesday, August 19th. The stock was bought at an average cost of $67.59 per share, for a total transaction of $500,639.13. Following the completion of the transaction, the director owned 7,407 shares of the company's stock, valued at approximately $500,639.13. The trade was a ∞ increase in their ownership of the stock. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is available through this hyperlink. Also, CAO Amy B. Kulikowski sold 2,900 shares of the stock in a transaction on Tuesday, August 18th. The shares were sold at an average price of $68.60, for a total value of $198,940.00. Following the completion of the transaction, the chief accounting officer directly owned 9,725 shares in the company, valued at approximately $667,135. This represents a 22.97% decrease in their position. The SEC filing for this sale provides additional information. Corporate insiders own 0.76% of the company's stock.

BorgWarner Company Profile

BorgWarner Inc NYSE: BWA is a global automotive technology company that develops and manufactures propulsion and mobility systems for vehicle manufacturers and commercial vehicle customers. The company serves both internal-combustion and electrified vehicle markets, with a portfolio focused on improving vehicle efficiency, performance, emissions, and electrification.

Its products and technologies include turbochargers, emissions and thermal-management systems, transmission components, friction products, battery systems, battery charging equipment, power electronics, electric motors, and other electric-drive components.

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