BorgWarner Inc. Fundamental Analysis (NYSE: BWA)
BorgWarner Inc. (NYSE: BWA) shows weak financial fundamentals with a PE ratio of 21.50, profit margin of 3.36%, and ROE of 8.61%. The company generates $14.2B in annual revenue with weak year-over-year growth of 1.65%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 43.0/100 based on profitability, valuation, growth, and balance sheet metrics. The D grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze BWA's fundamental strength across five key dimensions:
Efficiency Score
WeakBWA struggles to generate sufficient returns from assets.
Valuation Score
ExcellentBWA trades at attractive valuation levels.
Growth Score
WeakBWA faces weak or negative growth trends.
Financial Health Score
ExcellentBWA maintains a strong and stable balance sheet.
Profitability Score
WeakBWA struggles to sustain strong margins.
Key Financial Metrics
Is BWA Expensive or Cheap?
P/E Ratio
BWA trades at 21.50 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, BWA's PEG of 0.08 indicates potential undervaluation.
Price to Book
The market values BorgWarner Inc. at 1.82 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 6.36 times EBITDA. This is generally considered low.
How Well Does BWA Make Money?
Net Profit Margin
For every $100 in sales, BorgWarner Inc. keeps $3.36 as profit after all expenses.
Operating Margin
Core operations generate 5.50 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $8.61 in profit for every $100 of shareholder equity.
ROA
BorgWarner Inc. generates $3.62 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
BorgWarner Inc. produces operating cash flow of $1.67B, showing steady but balanced cash generation.
Free Cash Flow
BorgWarner Inc. produces free cash flow of $1.18B, offering steady but limited capital for shareholder returns and expansion.
FCF Per Share
Each share generates $5.86 in free cash annually.
FCF Yield
BWA converts 11.47% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
21.50
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.08
vs 25 benchmark
P/B Ratio
Price to book value ratio
1.82
vs 25 benchmark
P/S Ratio
Price to sales ratio
0.72
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.56
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.41
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.09
vs 25 benchmark
ROA
Return on assets percentage
0.04
vs 25 benchmark
ROCE
Return on capital employed
0.09
vs 25 benchmark
How BWA Stacks Against Its Sector Peers
| Metric | BWA Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 21.50 | 24.94 | Better (Cheaper) |
| ROE | 8.61% | 965.00% | Weak |
| Net Margin | 3.36% | -2081.00% (disorted) | Weak |
| Debt/Equity | 0.56 | 0.71 | Strong (Low Leverage) |
| Current Ratio | 1.41 | 2.36 | Neutral |
| ROA | 3.62% | 364.00% | Weak |
BWA outperforms its industry in 2 out of 6 key metrics, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews BorgWarner Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
40.05%
Industry Style: Cyclical, Growth, Discretionary
High GrowthEPS CAGR
-44.91%
Industry Style: Cyclical, Growth, Discretionary
DecliningFCF CAGR
38.41%
Industry Style: Cyclical, Growth, Discretionary
High Growth