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BorgWarner (BWA) Gains But Lags Market: What You Should Know

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BorgWarner (BWA - Free Report) closed at $33.80 in the latest trading session, marking a +1.78% move from the prior day. This change lagged the S&P 500's 2.65% gain on the day. Meanwhile, the Dow gained 1.86%, and the Nasdaq, a tech-heavy index, added 0.24%.

Heading into today, shares of the auto parts supplier had lost 10.2% over the past month, outpacing the Auto-Tires-Trucks sector's loss of 24.02% and lagging the S&P 500's loss of 8.99% in that time.

BorgWarner will be looking to display strength as it nears its next earnings release, which is expected to be October 27, 2022. The company is expected to report EPS of $1.02, up 27.5% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $4.02 billion, up 17.61% from the year-ago period.

BWA's full-year Zacks Consensus Estimates are calling for earnings of $4.26 per share and revenue of $15.75 billion. These results would represent year-over-year changes of +2.65% and +6.15%, respectively.

Any recent changes to analyst estimates for BorgWarner should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.12% lower within the past month. BorgWarner is currently a Zacks Rank #3 (Hold).

Valuation is also important, so investors should note that BorgWarner has a Forward P/E ratio of 7.79 right now. For comparison, its industry has an average Forward P/E of 10.64, which means BorgWarner is trading at a discount to the group.

Meanwhile, BWA's PEG ratio is currently 0.29. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Automotive - Original Equipment was holding an average PEG ratio of 0.57 at yesterday's closing price.

The Automotive - Original Equipment industry is part of the Auto-Tires-Trucks sector. This industry currently has a Zacks Industry Rank of 166, which puts it in the bottom 35% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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