It has been about a month since the last earnings report for BorgWarner (BWA Quick QuoteBWA - Free Report) . Shares have lost about 6.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is BorgWarner due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

BorgWarner's Q2 Earnings & Sales Beat Estimates

BorgWarner reported adjusted earnings of $1.08 per share for second-quarter 2021, beating the Zacks Consensus Estimate of 79 cents and turning around from the year-ago loss of 14 cents. Higher-than-anticipated revenues across all segments resulted in the outperformance.

This automotive equipment supplier reported net sales of $3,758 million, outpacing the Zacks Consensus Estimate of $3,483 million. Further, the top-line figure increased a whopping 163.5% from the year-ago quarter’s $1,426 million, thanks to the Delphi Technologies buyout and increased demand for products.

Segmental Performance

Air Management: Net sales totaled $1,854 million for the reported quarter compared with $826 million registered in the year-ago period. The sales figure also topped the Zacks Consensus Estimate of $1,686 million. Adjusted EBIT of $277 million compared favorably with the year-ago period’s $28 million amid higher sales and restructuring efforts.

e-Propulsion & Drivetrain: Sales from the segment came in at $1,337 million, jumping from $607 million in second-quarter 2020. The sales figure also surpassed the Zacks Consensus Estimate of $1,289 million. The segment generated adjusted EBIT of $132 million for second-quarter 2021 compared with $1 million recorded in the corresponding period of 2020.

Fuel Injection: Sales and adjusted EBIT from the segment totaled $480 million and $38 million, respectively. The sales figure topped the Zacks Consensus Estimate of $473 million. Adjusted EBIT margin for the quarter was 7.9%.

Aftermarket: Sales and adjusted EBIT from the segment totaled $226 million and $32 million, respectively. The sales figure outpaced the Zacks Consensus Estimate of $200 million. Adjusted EBIT margin for the quarter came in at 14.2%.

Financial Position

As of Jun 30, 2021, BorgWarner had $1,553 million in cash compared with $1,650 million on Dec 31, 2020. For the June-end quarter, long-term debt was $4,348 million, up from $3,738 million recorded on Dec 31, 2020. Net cash provided by operating activities was $280 million for the second quarter. Investment in capital expenditure, including tooling outlays, was $147 million.

View Raised

For full-year 2021, the company now anticipates net sales within $15.2-$15.6 billion, up from the previous guided range of $14.8-$15.4 billion. Adjusted operating margin and net earnings are expected in the band of 10.2-10.5% and $4.15-$4.40 per share, higher than the earlier guidance of 10.1-10.5% and $3.42-$3.92, respectively. Free cash flow is projected between $800 million and $900 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month. The consensus estimate has shifted -5.91% due to these changes.

VGM Scores

At this time, BorgWarner has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, BorgWarner has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.