Borgwarner Inc (NYSE: BWA)

Sector: Consumer Cyclical Industry: Auto Parts CIK: 0000908255
Market Cap 13.42 Bn
P/B 2.47
P/E 48.46
P/S 0.94
ROIC (Qtr) 5.60
Div Yield % 0.90
Rev 1y % (Qtr) 3.87
Total Debt (Qtr) 3.90 Bn
Debt/Equity (Qtr) 0.72
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About

BorgWarner Inc., known by its ticker symbol BWA, is a prominent player in the automotive industry, specializing in clean and efficient technology solutions for combustion, hybrid, and electric vehicles. With a global footprint, the company operates in Europe, the Americas, and Asia, supplying its innovative products to nearly every major automotive Original Equipment Manufacturer (OEM) worldwide. BorgWarner's primary business activities revolve around the development, manufacture, and sale of a wide range of products. These include turbochargers,...

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Investment thesis

Bull case

  • Strong operating cash flow of 1.65B provides robust 0.42x coverage of total debt 3.90B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 2.31B provide 462.60x coverage of short-term debt 5M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 11.32B provides 2.90x coverage of total debt 3.90B, indicating robust asset backing and low credit risk.
  • Operating cash flow of 1.65B provides exceptional 28.41x coverage of minority interest expenses 58M, showing strong core operations.
  • Operating cash flow of 1.65B provides exceptional 42.26x coverage of interest expenses 39M, showing strong debt service capability.

Bear case

  • Operating cash flow of 1.65B barely covers its investment activities of (368M), with a coverage ratio of -4.48, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 1.65B provides thin coverage of dividend payments of (119M) with a -13.85 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • High receivables of 2.96B relative to inventory of 1.21B (2.45 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Free cash flow of 1.25B represents just -3.02x of debt issuance (414M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Retained earnings of 6.57B provide limited buffer against comprehensive income items of (799M), which is -8.22x, indicating elevated exposure to market risks.

Geographical Breakdown of Revenue (2025)

Segments Breakdown of Revenue (2025)

Peer comparison

Companies in the Auto Parts
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ORLY O Reilly Automotive Inc 79.05 Bn 31.82 4.53 8.40 Bn
2 AZO Autozone Inc 62.61 Bn 25.41 3.25 12.05 Bn
3 ALSN Allison Transmission Holdings Inc 21.28 Bn 43.99 10.65 2.40 Bn
4 MGA Magna International Inc 18.84 Bn 22.73 0.45 6.69 Bn
5 GPC Genuine Parts Co 18.74 Bn 27.28 1.22 6.40 Bn
6 APTV Aptiv PLC 18.21 Bn 110.36 0.89 7.95 Bn
7 BWA Borgwarner Inc 13.42 Bn 48.46 0.94 3.90 Bn
8 MOD Modine Manufacturing Co 11.46 Bn 117.21 3.99 0.62 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.10 1.25
EV to Cash from Ops. EV/CFO 9.19 14.01
EV to Debt EV to Debt 3.89 36.85
EV to EBIT EV/EBIT 30.00 21.23
EV to EBITDA EV/EBITDA 28.27 9.40
EV to Free Cash Flow [EV/FCF] EV/FCF 12.11 -2.78
EV to Market Cap EV to Market Cap 1.13 1.79
EV to Revenue EV/Rev 1.06 3.03
Price to Book Value [P/B] P/B 2.47 0.00
Price to Earnings [P/E] P/E 48.46 12.66
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.33 1.87
Dividend Payout Ratio % Div Payout % (Qtr) 43.40 13.37
Dividend per Basic Share Div per Share (Qtr) 0.56 0.42
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 9.59 14.12
Interest Coverage Int. cover (Qtr) 12.95 -114.22
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 38.83 -15.53
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 10.46 20.52
Dividend Growth (1y) % Div 1y % (Qtr) 27.27 2.88
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -14.98 35.51
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -1.83 -1.89
EBIT Growth (1y) % EBIT 1y % (Qtr) 7.68 -6.91
EBT Growth (1y) % EBT 1y % (Qtr) 3.79 -105.73
EPS Growth (1y) % EPS 1y % (Qtr) -14.57 -467.53
FCF Growth (1y) % FCF 1y % (Qtr) 70.67 15.37
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 0.98 23.99
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.04 0.92
Cash Payout Ratio Cash Payout (Qtr) 0.06 0.08
Cash Ratio Cash Ratio (Qtr) 0.70 0.72
Current Ratio Curr Ratio (Qtr) 2.07 2.95
Debt to Equity Ratio Debt/Equity (Qtr) 0.72 0.09
Interest Cover Ratio Int Coverage (Qtr) 12.95 -114.22
Times Interest Earned Times Interest Earned (Qtr) 12.95 -114.22
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 3.50 -988.62
EBIT Margin % EBIT Margin % (Qtr) 3.53 -1,028.09
EBT Margin % EBT Margin % (Qtr) 3.26 -1,019.44
Gross Margin % Gross Margin % (Qtr) 18.70 -124.68
Net Profit Margin % Net Margin % (Qtr) 1.90 -1,011.37