U.S. Markets closed

BorgWarner (BWA) to Post Q1 Earnings: Is a Beat in Store?

Zacks Equity Research

BorgWarner Inc. BWA is set to release first-quarter 2019 earnings on Apr 25, before the market opens. In the last reported quarter, the company delivered a positive earnings surprise of 13.1%. It surpassed estimates in all of the trailing four quarters, the average beat being 7%.

In the past three months, shares of BorgWarner have underperformed the industry it belongs to. The stock has gained 10% compared with the industry’s growth of 12% during that period.

Let’s see how things are shaping up for the upcoming announcement.

BorgWarner Inc. Price and EPS Surprise

 

BorgWarner Inc. Price and EPS Surprise | BorgWarner Inc. Quote

What’s Driving Better-Than-Expected Earnings

For first-quarter 2019, the company’s net organic sales are likely to decrease 5.5-7.5% from net sales of $2.8 billion in the year-ago quarter. Further, it envisions net earnings of 92-96 cents per share.

For 2019, BorgWarner anticipates net sales of $9.90-$10.37 billion and net earnings of $4-$4.25 per share. Further, operating margin is expected to be 11.9-12.2%.

The company anticipates net new business backlog of $2.0-$2.4 billion between 2019 and 2021. It expects net new business backlog to drive organic growth to more than the estimated light-vehicle market exposure of 5.0-6.0% between 2019 and 2021. It projects backlogs in 2019, 2020 and 2021 to be $430-$580 million, $750-$875 million and $800-$950 million, respectively.

Why a Positive Surprise is Likely in This Quarter

Our proven model predicts that BorgWarner is likely to beat earnings estimates in this quarter. This is because a stock needs to have the right combination of two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for increasing the odds of an earnings beat.

Earnings ESP: BorgWarner has an Earnings ESP of +3.49% as the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 98 cents and 95 cents, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3.

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Other Key Picks

Here are a few other auto stocks worth considering, comprising the right combination of elements to come up with an earnings beat this time around:

Wabco Holdings Inc. WBC has an Earnings ESP of +2.37% and a Zacks Rank of 3 at present. The company is expected to release financial results for first-quarter 2019 on Apr 26.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Cummins Inc. CMI has an Earnings ESP of +2.02% and a Zacks Rank #3 at present. The company’s financial results for first-quarter 2019 are slated to release on Apr 30.

General Motors Company GM has an Earnings ESP of +5.61% and a Zacks Rank #3 at present. The company’s financial results for first-quarter 2019 are slated to release on Apr 30.

Is Your Investment Advisor Fumbling Your Financial Future?

See how you can more effectively safeguard your retirement with a new Special Report, “4 Warning Signs Your Investment Advisor Might Be Sabotaging Your Financial Future.”

Click to get it free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
General Motors Company (GM) : Free Stock Analysis Report
 
Wabco Holdings Inc. (WBC) : Free Stock Analysis Report
 
BorgWarner Inc. (BWA) : Free Stock Analysis Report
 
Cummins Inc. (CMI) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.