BorgWarner: Its Performance in a Competitive Market

Gabriel Kane
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BorgWarner Stock Falls 8.7% after 3Q15 Earnings Release

(Continued from Prior Part)

BorgWarner and its peers

In this article, we’ll compare BorgWarner with its industry peers.

  • The PE ( price-to-earnings) ratios of BorgWarner (BWA), Honeywell International (HON), Cummins (CMI), Lear Corporation (LEA), and Tenneco (TEN) are 15.0x, 18.0x, 10.9x, 13.5x, and 15.2x, respectively.

  • The PBV ( price-to-book value) ratios of BorgWarner, Honeywell, Cummins, Lear, and Tenneco are 2.5x, 4.5x, 2.4x, 3.3x, and 6.2x, respectively.

  • The price-to-sales ratios of BorgWarner, Honeywell, Cummins, Lear, and Tenneco are 1.2x, 2.0x, 0.9x, 0.5x, and 0.4x, respectively.

  • The EPS (earnings per share) of BorgWarner, Honeywell, Cummins, Lear, and Tenneco are $0.70, $1.60, $2.14, $2.34, and $0.87, respectively.

According to the above findings, BorgWarner’s peers are way ahead of the company, based on EPS. However, it has outperformed its peers based on its price-to-sales ratio.

ETFs that invest in BorgWarner

The PowerShares Cleantech Portfolio ETF (PZD) invests 3.2% of its holdings in the company. The ETF tracks a tiered equal-weighted index of companies in the cleantech industry selected for their outperformance potential.

The Guggenheim S&P Equal Weight Consumer Discretionary ETF (RCD) invests 1.2% of its holdings in BorgWarner. The ETF tracks an equal-weighted index of large-cap US Consumer Discretionary stocks drawn from the S&P 500.

The PowerShares S&P 500 High Beta Portfolio ETF (SPHB) invests 1.0% of its holdings in the company. The ETF tracks a beta-weighted index of the 100 highest beta stocks in the S&P 500.

Comparing BorgWarner and its ETFs

Now let’s look at BorgWarner compared with its ETFs:

  • The year-to-date price movements of BorgWarner, PZD, RCD, and SPHB are -23.8%, 1.1%, 2.8%, and -7.8%, respectively.

  • The PE ratios of BorgWarner, PZD, and RCD are 15.0x, 28.5x, and 15.3x, respectively.

  • The PBV ratios of BorgWarner, PZD, RCD, and SPHB are 2.5x, 2.5x, 3.7x, and 1.9x, respectively.

According to the above findings, ETFs are way ahead of BorgWarner based on price movement and PE. However, it has outperformed its ETFs based on PBV.

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