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Frank J. Constantino
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Mr. Frank J. Constantino, of Beckley, W.Va., is an educated private investor with 15 years of experience. Constantino follows the financial markets closely and provides opinion through Seeking Alpha. He was recently named in the "Who's Who of Wall Street" by Wall Street Economists for his... More
  • BorgWarner (BWA) - Outperform 0 comments
    Dec 2, 2010 7:13 PM | about stocks: BWA

    BorgWarner Inc (NYSE:BWA)     12/02/2010     Outperform

     

    Price: $65.27  12/2/10

    Market Cap: $7.2 bil

    Book Value: $20.26/share

    Price to Book: 3.22

    Annual Sales: $5.3 bil

    Profit: $318.4 mil

    Profit/share: $2.80

    Expected Profit/share: $3.36

    PE: 24.66

    Dividend: 0

    Yield: 0%

    Debt: $1.0 bil

     

    Company Profile

    BorgWarner Inc. is a product leader in highly engineered components and systems for vehicle powertrain applications worldwide. The company operates manufacturing and technical facilities in several countries. Customers include Ford, DaimlerChrysler, General Motors, Toyota, Caterpillar, Navistar, PSA and VW Group. (Company Press Release)

     

    Reason for Outperform Rating:

    Auto sales are showing a stronger than expected recovery in recent months.  BorgWarner is the world leader in manufacturing fuel efficient drive train and engine components.  Countries world-wide are imposing new fuel efficiency standards for passenger automobiles.  I see this as a positive for BWA's future earnings.  Although the stock has had a recent run up in price I see a long-term opportunity for increased earnings and PE expansion.  BWA is currently trading at approximately 16 times next years earnings.  I recently wrote favorably about the company on Seeking Alpha's Instablog.  The article can be found at seekingalpha.com/instablog/722971-auditt...

     

    Risks

    Although BorgWarner has a large global presence, including emerging markets, another downturn in US auto sales would negatively impact future earnings and therefore stock price.  Rising fuel costs are not a risk for BorgWarner since this drives more people to choose fuel efficient vehicles.  This would only be a risk if there was a large price spike in gasoline that caused a decrease in auto sales.

     

    Recent News

    BorgWarner Shares Turbocharged

    http://www.thestreet.com/_yahoo/story/10936978/1/borgwarner-shares-turbocharged.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

     

    BorgWarner Introduces New Series of Turbochargers for Aftermarket Performance Customers

    http://finance.yahoo.com/news/BorgWarner-Introduces-New-prnews-1677029383.html?x=0&.v=1

     

    BorgWarner's New EFR Turbochargers Boost 2011 LMP2 Engine and CR-Z Hybrid Race Car for Honda Performance Development

    http://finance.yahoo.com/news/BorgWarners-New-EFR-prnews-2984902360.html?x=0&.v=1

     

    BorgWarner's Variable Cam Timing with Mid Position Lock Named 2011 Automotive News PACE Award Finalist

    http://finance.yahoo.com/news/BorgWarners-Variable-Cam-prnews-439843759.html?x=0&.v=1

     

    About Investopia

    Investopia uses social media to provide open commentary and discussion on financial markets, stocks, and other derivatives.  Investopia does not provide financial advice.  Any article, rating, or other commentary should not be considered as a recommendation to trade or hold any security.  Please consult your financial professional before making any investment decision.



    Disclosure: Long BWA
    Stocks: BWA
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