Will BorgWarner Inc’s (NYSE:BWA) Earnings Grow In The Next 12 Months?
Based on BorgWarner Inc’s (NYSE:BWA) earnings update on 30 September 2018, analysts seem highly optimistic, as a 74% rise in profits is expected in the upcoming year, compared with the historical 5-year average growth rate of -13%. With trailing-twelve-month net income at current levels of US$440m, we should see this rise to US$765m in 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
Check out our latest analysis for BorgWarner
Can we expect BorgWarner to keep growing?
Over the next three years, it seems the consensus view of the 16 analysts covering BWA is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of BWA’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.
This results in an annual growth rate of 9.5% based on the most recent earnings level of US$440m to the final forecast of US$890m by 2021. EPS reaches $5.46 in the final year of forecast compared to the current $2.09 EPS today. The main reason for growth is a result of cost cutting activities, as revenues is expected to grow much slower than earnings. In 2021, BWA’s profit margin will have expanded from 4.5% to 7.9%.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For BorgWarner, there are three important factors you should further examine:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is BorgWarner worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether BorgWarner is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of BorgWarner? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
