BWA - Embedded Expectations Analysis - 2021 09 21
BorgWarner Inc. (BWA:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 14.9x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and management may be concerned about in-house supplier production of inverters, financial targets, and their Delphi acquisition synergies.Specifically, management may lack confidence in their ability to successfully capture synergies from the Delphi acquisition, maintain strong overall performance, and capitalize on the 800-volt systems trend. In addition, they may be overstating the weight reduction capabilities of their dual inverters, their in-house iDM220 integrated drive module production levels, and the ability of turbo and gasoline direct-injected (GDi) systems in hybrid powertrain architectures to help meet CO2 targets. Furthermore, management may lack confidence in their ability to meet 2025 high-voltage coolant heaters sales goals and 2021 growth and free cash flow guidance. Moreover, they may be concerned about the push by manufacturers to produce inverters themselves and they may lack confidence in their ability to grab outsourced production market share.
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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