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What's in Store for BorgWarner (BWA) This Earnings Season?

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BorgWarner Inc. BWA is slated to release fourth-quarter 2020 results on Feb 11, before the bell. The Zacks Consensus Estimate is pegged at a loss of 88 cents per share on revenues of $3.62 billion for the quarter.

This automotive equipment supplier registered higher-than-anticipated earnings in the last reported quarter on solid revenues from the Drivetrain segment.

BorgWarner beat estimates in each of the trailing four quarters, the average surprise being 37.29%. This is depicted in the graph below:

BorgWarner Inc. Price and EPS Surprise

BorgWarner Inc. Price and EPS Surprise
BorgWarner Inc. Price and EPS Surprise

BorgWarner Inc. price-eps-surprise | BorgWarner Inc. Quote

Trend in Estimate Revisions

The Zacks Consensus Estimate for BorgWarner’s fourth-quarter earnings per share witnessed an upward revision of five cents to 88 cents in the past 30 days. However, this compares unfavorably with the year-ago quarter’s earnings of $1.17 per share, indicating a 24.8% decline, year on year. Nonetheless, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year jump of 41.4%.

Earnings Whispers

Our proven model predicts an earnings beat for BorgWarner this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This has been elaborated below.

Earnings ESP: BorgWarner has an Earnings ESP of +2.94%. This is because the Most Accurate Estimate comes in two cents higher than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: BorgWarner currently holds a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors at Play

With the economy gradually recovering from the pandemic blues, auto sales across the globe have managed to rebound, underlined by the rising momentum of new vehicle sales. This is likely to have aided BorgWarner’s fourth-quarter sales and earnings.

Notably, the Zacks Consensus Estimate for the Engine segment’s quarterly net sales is pegged at $1,536 million, higher than the $1,533 million reported in the year-ago period and the $1,476 million reported in the previous quarter.

The consensus mark for the Drivetrain segment’s quarterly net sales is pinned at $1,103 million, up from the year-ago quarter’s $1,042 million and previous quarter’s $1,075 million.

Further, BorgWarner’s expansion efforts, product launches, strategic collaborations and solid backlog are also likely to have aided its fourth-quarter performance.

Other Stocks to Consider

Along with BorgWarner, here are a few other stocks worth considering, as these too have the right combination of elements to come up with an earnings beat this time around:

Allison Transmission Holdings ALSN has an Earnings ESP of +7.44% and carries a Zacks Rank #3 at present. The company will announce fourth-quarter 2020 results on Feb 17.

LKQ Corporation LKQ has an Earnings ESP of +5.48% and carries a Zacks Rank #3, currently. The company is scheduled to report quarterly numbers on Feb 18.

Magna International MGA has an Earnings ESP of +5.42% and currently flaunts a Zacks Rank of 1. The company is slated to release earnings results on Feb 19.

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