BWA - Embedded Expectations Analysis - 2020 07 16
BorgWarner Inc. (BWA:USA) currently trades above historical averages relative to UAFRS-based (Uniform) earnings, with a 30.7x Uniform P/E. Even at these levels, the market has bearish expectations for the firm, and management may be concerned about the current market environment, and various investments including the Delphi acquisitionSpecifically, management may be exaggerating the strategic merits of the Delphi Technologies acquisition, and might have concerns about the leverage impact of the said acquisition. Additionally, they may be concerned about their third-party vendors reducing work, and the sustainability of their growth drivers. Moreover, they may lack confidence in the potential of continued investment in Drivetrain R&D, their ability to maintain their liquidity level, and their ability to manage through declining production levels, particularly in Europe. Furthermore, they may be exaggerating optimism in their China outlook and clarity in their production outlook, and they may lack confidence in their ability to grow net working capital. Finally, they may be concerned about struggles in the supply base and the impact of pausing their share repurchase program
BorgWarner is a holding company. Through its subsidiaries, the company is a global product provider in technology solutions for combustion, hybrid and electric vehicles. The company manufactures and sells these products worldwide, primarily to original equipment manufacturers of light vehicles (passenger cars, sport-utility vehicles, vans and light trucks). The company's segments are: Engine, which provides turbochargers, eBoosters, timing systems, emissions systems, thermal systems, gasoline ignition technology, cabin heaters, battery heaters and battery charging; and Drivetrain, which provides rotating electrical components, power electronics, clutching systems, control modules and all-wheel drive systems.
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