BorgWarner's (BWA) Q2 Earnings Meet, Revenues Top Estimates
BorgWarner Inc. BWA has delivered adjusted earnings of $1 per share in second-quarter 2019, which is in line with the Zacks Consensus Estimate. However, the figure fell from $1.18 recorded in the year-ago quarter. Net income amounted to $172 million ($0.83 per share) compared with $272 million ($1.3 per share) in the prior-year quarter.
BorgWarner’s net sales declined 5.3% year over year to $2.55 billion, which beat the Zacks Consensus Estimate of $2.53 billion. Net sales fell nearly $140 million, owing to foreign currency fluctuations.
In the reported quarter, operating income amounted to $285 million compared with the prior-year quarter’s figure of $313 million.
Net sales in the Engine segment fell to $1.57 billion from $1.67 billion in the prior-year quarter. Excluding impacts of foreign currencies and the divestiture of the thermostat product line, net sales inched down 0.4% year over year and adjusted EBIT (earnings before interest, income taxes and non-controlling interest) declined 6.9% to $258 million.
In the Drivetrain segment, net sales declined to $998 million from $1.03 billion in the prior-year quarter. Excluding impacts of foreign currencies, net sales inched up 0.2% on a year-over-year basis and adjusted EBIT fell 8.6% to $106 million.
BorgWarner Inc. Price, Consensus and EPS Surprise
BorgWarner Inc. price-consensus-eps-surprise-chart | BorgWarner Inc. Quote
Financial Position
As of Jun 30, 2019, BorgWarner had $710 million in cash compared with $739 million as of Dec 31, 2018. Long-term debt was $1.93 billion, down from $1.94 billion recorded at the end of 2018.
Net cash provided by operating activities was $467 million as of Jun 30 compared with $305 million as of Jun 30, 2018. Investment in capital expenditure, including tooling outlays, declined to $244 million from $269 million recorded as of Jun 30, 2018.
Outlook
For third-quarter 2019, the company’s net organic sales are likely to be down 1.5% to up 1.5% from net sales of $2.48 billion in the year-ago quarter. Further, it envisions net earnings between 83 cents and 90 cents per share.
For 2019, BorgWarner reaffirmed its guidance. It anticipates net sales in the range of $9.94-$10.18 billion and net earnings in the band of $3.75-$4 per share. Further, operating margin is expected in the range of 11.4-11.8%.
Zacks Rank & Stocks to Consider
BorgWarner currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the auto space are Copart, Inc CPRT, CarMax, Inc KMX and Advance Auto Parts, Inc AAP. While Copart sports a Zacks Rank #1 (Strong Buy), CarMax and Advance Auto Parts carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Copart has an expected long-term growth rate of 20%. In the past six months, shares of the company have surged 59.3%.
CarMax has an expected long-term growth rate of 12.6%. In the past six months, shares of the company have rallied 47.9%.
Advance Auto Parts has an expected long-term growth rate of 11.6%. In the past six months, shares of the company have moved up 2.3%.
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