Attractive Price-to-Earnings Ratio
Low Price-to-Sales Ratio
Decent Gross Profit Margin
Strong Interest Coverage
Strong Liquidity Ratios
Low Debt Levels
Strong Financial Performance
Resilient Product Portfolio
Effective Cost Control
New Product Awards and Market Expansion
Strategic Focus on E-Products
Moderate EV/EBITDA Ratio
Low Net Profit Margin
Moderate Return on Equity
Cash Ratio Needs Improvement
Goodwill Impairment Charges
Market Headwinds and Uncertainty
Dependence on Customer Programs
Overall, BorgWarner demonstrates a solid business quality with strong financial performance, effective cost control, and a resilient product portfolio, although it faces challenges from goodwill impairments and market uncertainties. Looking ahead, the company has positive growth prospects driven by new product awards and a strategic focus on e-products, despite anticipated industry headwinds.
Analysis Date: February 6, 2025
Last Updated: March 11, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$19.28
Current Market Price: $25.84
IV/P Ratio: 0.75x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
-34.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for BWA
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (16.78)
P/B ratio ≤ 1.5 (1.03)
Current ratio ≥ 2.0 (1.79x)
Long-term debt < Net current assets (1.31x)
Margin of safety (-34.0%)
BWA does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
A gross profit margin of 18.80% indicates that BWA retains a reasonable portion of revenue after accounting for the cost of goods sold.
With an interest coverage ratio of 15.72, BWA can comfortably meet its interest obligations, reflecting solid operational performance.
The net profit margin of 2.40% is relatively low, which may indicate challenges in controlling expenses or generating profits from revenue.
A return on equity of 5.72% suggests that the company is not generating high returns on shareholders' equity, which can be a concern for investors.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
5.72%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
-2.89%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
18.80%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
2.40%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
The current ratio of 1.79 and quick ratio of 1.45 indicate that BWA has a solid liquidity position, capable of meeting short-term obligations.
With a debt-to-equity ratio of 0.75 and a debt-to-assets ratio of 29.74%, the company has a manageable level of debt, indicating financial stability.
The cash ratio of 0.57 indicates that while BWA has some cash reserves, it may not have sufficient liquidity to cover all current liabilities without relying on inventory or receivables.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.73x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
1.79x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
BorgWarner delivered approximately $14 billion in sales, with a flat performance compared to 2023, and achieved an adjusted operating margin above 10%, indicating strong operational control amidst a challenging market.
BorgWarner has a balanced product portfolio that includes both foundational and e-products, which positions them well to adapt to changes in powertrain demand. The company has maintained a strong market share position across various segments.
The company's focus on cost control and operational excellence has allowed it to maintain profitability even in a declining production environment, as reflected in their strong margin performance.
BorgWarner recorded significant goodwill and fixed asset impairment charges due to delayed BEV adoption, indicating challenges in future value realization for some segments.
BorgWarner secured several new product awards in both foundational and e-products, which are expected to drive future growth and showcase their innovation capabilities.
The transition towards electric vehicles and e-products is a key focus, with planned investments aimed at increasing scale and market share in this segment, which is expected to grow.
BorgWarner anticipates industry volume declines in 2025 due to economic headwinds and potential tariff impacts, which may hinder growth in the short term.
The company faces risks associated with customer program delays and cancellations, particularly in the EV sector, which may affect future growth.