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BorgWarner's (BWA) Q2 Earnings Beat Estimates, Revenues Miss
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BorgWarner Inc. (BWA - Free Report) delivered adjusted earnings of $1.18 per share in second-quarter 2018, beating the Zacks Consensus Estimate of $1.10. The figure also increased from 96 cents per share in the year-ago quarter. Net earnings rose to $272 million from the prior-year quarter figure of $212 million.
BorgWarner reported revenues of $2.69 billion, missing the Zacks Consensus Estimate of $2.72 billion. The figure was $2.39 billion in the year-ago quarter. The acquisition of Sevcon contributed $18 million to the net sales figure.
In the reported quarter, operating income amounted to $312.8 million compared with prior-year’s figure of $298.1 million.
Revenues from the Engine segment increased to $1.67 billion from $1.48 billion in the prior-year quarter. Excluding the impact of foreign currencies, net sales rose 7.2% in the segment. Adjusted EBIT came in at $279 million. Excluding impact of foreign currencies and the acquisition of Sevcon, the figure was $268 million, a rise of 10% from the year-ago quarter.
At the Drivetrain segment, revenues were up $1.03 billion in the second quarter from $921 million in the prior-year quarter. Excluding the impact of foreign currencies and acquisition of Sevcon, net sales rallied 7.4% year over year. Adjusted EBIT came in at $116 million. Excluding impact of foreign currencies and the acquisition of Sevcon, the figure was $118 million, a rise of 7.7% from the prior-year quarter.
Financial Position
BorgWarner had $361.9 million in cash as of Jun 30, 2018 compared with $545.3 million as of Dec 31, 2017. The long-term debt was $2.1 billion almost in line with the figure recorded as of Dec 31, 2017.
At the end of six months of 2018, net cash provided by operating activities was $305 million compared with $399 million in the prior-year quarter. During the quarter, capital expenditures, including tooling outlays, increased to $269 million from $254 million in first-half of 2017.
Dividend
The company announced that its board has approved a quarterly cash dividend of 17 cents per common stock. The amount will be paid on Sep 17, 2018 to shareholders as of Sep 4, 2018.
Outlook
For third-quarter 2018, the company envisions net earnings per share to lie within the range of $1.03-$1.06. Moreover, it anticipates net organic sales growth of 4.5-6.5% compared with net sales of $2.42 billion in the year-ago quarter. The Sevcon acquisition will contribute $16 million to net sales.
For full-year 2018, the company has increased its organic growth guidance. BorgWarner projects net sales to be $10.64-$10.75 billion from the prior expectation of $10.77-$10.94 billion. The new estimations imply organic growth of 6-7% compared with the previous range of 5-7%. Further, the company projects net earnings within the range of $4.45-$4.50, an increase from the previous guidance of $4.30-$4.40.
Fox Factory has an expected long-term growth rate of 15.8%. Over a year, shares of the company have gained 30.2%.
Oshkosh has an expected long-term growth rate of 18.3%. Over a year, shares of the company have gained 5.3%.
Volvo has an expected long-term growth rate of 15%. Shares of the company have risen 2.9% in the past year.
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BorgWarner's (BWA) Q2 Earnings Beat Estimates, Revenues Miss
BorgWarner Inc. (BWA - Free Report) delivered adjusted earnings of $1.18 per share in second-quarter 2018, beating the Zacks Consensus Estimate of $1.10. The figure also increased from 96 cents per share in the year-ago quarter. Net earnings rose to $272 million from the prior-year quarter figure of $212 million.
BorgWarner reported revenues of $2.69 billion, missing the Zacks Consensus Estimate of $2.72 billion. The figure was $2.39 billion in the year-ago quarter. The acquisition of Sevcon contributed $18 million to the net sales figure.
In the reported quarter, operating income amounted to $312.8 million compared with prior-year’s figure of $298.1 million.
BorgWarner Inc. Price, Consensus and EPS Surprise
BorgWarner Inc. Price, Consensus and EPS Surprise | BorgWarner Inc. Quote
Segment Details
Revenues from the Engine segment increased to $1.67 billion from $1.48 billion in the prior-year quarter. Excluding the impact of foreign currencies, net sales rose 7.2% in the segment. Adjusted EBIT came in at $279 million. Excluding impact of foreign currencies and the acquisition of Sevcon, the figure was $268 million, a rise of 10% from the year-ago quarter.
At the Drivetrain segment, revenues were up $1.03 billion in the second quarter from $921 million in the prior-year quarter. Excluding the impact of foreign currencies and acquisition of Sevcon, net sales rallied 7.4% year over year. Adjusted EBIT came in at $116 million. Excluding impact of foreign currencies and the acquisition of Sevcon, the figure was $118 million, a rise of 7.7% from the prior-year quarter.
Financial Position
BorgWarner had $361.9 million in cash as of Jun 30, 2018 compared with $545.3 million as of Dec 31, 2017. The long-term debt was $2.1 billion almost in line with the figure recorded as of Dec 31, 2017.
At the end of six months of 2018, net cash provided by operating activities was $305 million compared with $399 million in the prior-year quarter. During the quarter, capital expenditures, including tooling outlays, increased to $269 million from $254 million in first-half of 2017.
Dividend
The company announced that its board has approved a quarterly cash dividend of 17 cents per common stock. The amount will be paid on Sep 17, 2018 to shareholders as of Sep 4, 2018.
Outlook
For third-quarter 2018, the company envisions net earnings per share to lie within the range of $1.03-$1.06. Moreover, it anticipates net organic sales growth of 4.5-6.5% compared with net sales of $2.42 billion in the year-ago quarter. The Sevcon acquisition will contribute $16 million to net sales.
For full-year 2018, the company has increased its organic growth guidance. BorgWarner projects net sales to be $10.64-$10.75 billion from the prior expectation of $10.77-$10.94 billion. The new estimations imply organic growth of 6-7% compared with the previous range of 5-7%. Further, the company projects net earnings within the range of $4.45-$4.50, an increase from the previous guidance of $4.30-$4.40.
Zacks Rank & Key Picks
BorgWarner currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space are Fox Factory Holding Corporation (FOXF - Free Report) , Oshkosh Corporation (OSK - Free Report) and AB Volvo (VLVLY - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Fox Factory has an expected long-term growth rate of 15.8%. Over a year, shares of the company have gained 30.2%.
Oshkosh has an expected long-term growth rate of 18.3%. Over a year, shares of the company have gained 5.3%.
Volvo has an expected long-term growth rate of 15%. Shares of the company have risen 2.9% in the past year.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>