Is BorgWarner (BWA) Positioned to Beat on Q4 Earnings?
BorgWarner Inc. BWA is set to report fourth-quarter and full-year 2015 results on Feb 11. In the last quarter, the company delivered a positive earnings surprise of 2.82%. Let us see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that BorgWarner is likely to beat earnings this season because it has the right combination of the two key components.
Zacks ESP: Earnings ESP for BorgWarner is currently pegged at +1.39% as the Most Accurate estimate of 73 cents stands above the Zacks Consensus Estimate of 72 cents. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.
Zacks Rank: BorgWarner currently carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings. Conversely, Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.
BorgWarner’s Zacks Rank #3 and positive ESP make us reasonably confident of an earnings beat.
What is Driving the Better-than-Expected Earnings?
BorgWarner completed the acquisition of Remy International, Inc. in Nov 2015. This acquisition is expected to augment the company’s fourth-quarter revenues.
Meanwhile, BorgWarner is restructuring its Drivetrain segment. This has been leading to enhanced profitability. The company expects the restructuring to bring about adjusted earnings before interest, income taxes and non-controlling interest margin improvement of 100 basis points in the segment.
Moreover, a healthy balance sheet and ample cash flows help BorgWarner return capital to shareholders. These efforts also positively impact earnings per share.
Stocks to Consider
Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Superior Industries International, Inc. SUP has an Earnings ESP of +11.11% and a Zacks Rank #1 (Strong Buy). The company is expected to release fourth-quarter and full-year 2015 earnings results on Mar 7.
Visteon Corporation VC has an Earnings ESP of +22.73% and a Zacks Rank #1. The company is expected to release fourth-quarter and full-year 2015 earnings results on Feb 25.
Magna International Inc. MGA has an Earnings ESP of +0.89% and a Zacks Rank #3. The company is expected to report fourth-quarter and full-year 2015 results on Feb 26.
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BORG WARNER INC (BWA): Free Stock Analysis Report
SUPERIOR INDS (SUP): Free Stock Analysis Report
MAGNA INTL CL A (MGA): Free Stock Analysis Report
VISTEON CORP (VC): Free Stock Analysis Report
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