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Is BorgWarner (BWA) a Great Value Stock Right Now?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is BorgWarner (BWA). BWA is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 10.58, which compares to its industry's average of 13.37. Over the last 12 months, BWA's Forward P/E has been as high as 11.36 and as low as 7.45, with a median of 9.13.

Investors should also note that BWA holds a PEG ratio of 1.36. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. BWA's industry has an average PEG of 1.53 right now. Within the past year, BWA's PEG has been as high as 1.47 and as low as 0.98, with a median of 1.16.

Another notable valuation metric for BWA is its P/B ratio of 1.97. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. BWA's current P/B looks attractive when compared to its industry's average P/B of 2.76. Over the past 12 months, BWA's P/B has been as high as 2.09 and as low as 1.42, with a median of 1.86.

Finally, investors will want to recognize that BWA has a P/CF ratio of 7.62. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. BWA's P/CF compares to its industry's average P/CF of 7.78. Within the past 12 months, BWA's P/CF has been as high as 8.06 and as low as 5.22, with a median of 6.42.

These are only a few of the key metrics included in BorgWarner's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, BWA looks like an impressive value stock at the moment.


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