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Here's How BorgWarner (BWA) is Placed Ahead of Q2 Earnings

Zacks Equity Research
·5-min read

BorgWarner Inc. BWA is slated to release second-quarter 2022 results on Aug 3, before the opening bell. The Zacks Consensus Estimate for the quarter’s earnings and revenues is pegged at 86 cents per share and $3.69 billion, respectively. The consensus mark for second-quarter earnings per share has witnessed a downward revision of 6 cents in the past 30 days.

This automotive equipment supplier registered higher-than-anticipated earnings in the last reported quarter on better-than-anticipated revenues across all segments. Over the preceding four quarters, the company exceeded earnings expectations on all occasions, with the average being 33.1%. 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

Earnings Whispers

Our proven model does not conclusively predict 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 is not the case here as elaborated below.

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Earnings ESP: BorgWarner has an Earnings ESP of -0.68%. This is because the Most Accurate Estimate is pegged 1 cent lower 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.

Key Predictions

Frequent business wins and a few strategic acquisitions are likely to have a positive impact on BorgWarner’s upcoming results. BorgWarner’s buyout of Delphi Technologies has strengthened its electric propulsion leadership, with expanded capabilities and scale. The acquisition of AKASOL has expanded BorgWarner’s commercial vehicle electrification capabilities and is likely to have aided top-line growth. The buyout of Santroll's light vehicle eMotor business has also bolstered BorgWarner's scale in eMotor product leadership as well as enhanced manufacturing capabilities. These acquisitions are likely to have contributed to BorgWarner’s Q2 revenues.

On the flip side, the industry has been suffering from chip shortages and rising commodity costs, which are expected to have put pressure on the company’s revenues and profits.  Difficult labor market and logistical challenges are also likely to have dented margins. A decline in production amid the chip crunch is likely to have hurt the demand for BorgWarner’s offerings, which may impact the upcoming results.  The Zacks Consensus Estimate for BWA’s second-quarter 2022 earnings and revenues implies a year-over-year fall of 20.3% and 1.8%, respectively.

Here’s a sneak peek into BorgWarner’s second-quarter 2022 segmental revenue and EBIT estimates.

The Zacks Consensus Estimate for BorgWarner’s Air Management segment’s sales is pegged at $1,834 million for the period in discussion, suggesting a fall from $1,854 million reported in second-quarter 2021. EBIT from the segment is estimated at $240 million, indicating deterioration from $277 million recorded in the comparable year-ago period.

The consensus mark for second-quarter sales from the e-Propulsion & Drivetrain segment is pegged at $1,329 million, suggesting a drop from the $1,337 million registered in second-quarter 2021. The segmental EBIT estimate of $112 million also signals a year-over-year contraction of 15%.

The consensus mark for the Fuel Injection unit’s quarterly sales is pegged at $463 million, suggesting a decline of 3.5% year over year. The consensus mark for quarterly sales from the Aftermarket unit is pegged at $213 million, indicating a drop from $226 million recorded in second-quarter 2021.

Peer Releases

Here are the key takeaways from earnings releases of BWA peers including Autoliv ALV, Oshkosh Corporation OSK and Magna International MGA.

Autoliv reported second-quarter 2022 adjusted earnings of 90 cents per share, topping the Zacks Consensus Estimate of 46 cents. The bottom line fell 25% on a yearly basis. The company reported net sales of $2,081 million in the quarter, which missed the Zacks Consensus Estimate of $2,180 million. The top line, however, inched up 2.9% year over year.

ALV currently carries a Zacks Rank #3.

Oshkosh reported second-quarter 2022 second-quarter adjusted earnings of 41 cents per share, missing the Zacks Consensus Estimate of 93 cents. The bottom line also plunged from $2.09 recorded in the year-ago period. In the quarter under review, consolidated net sales declined 6.4% year over year to $2,066 million. The top line also lagged the Zacks Consensus Estimate of $2,220 million. Our estimate for the top line was $2,196.6 million.

OSK currently carries a Zacks Rank #3.

Magnareported second-quarter 2022 adjusted earnings of 83 cents per share, which declined 41% on a year-over-year basis. The bottom line also lagged the Zacks Consensus Estimate of 93 cents a share. In the reported quarter, net sales increased 4% from the prior-year quarter to $9,362 million and surpassed the consensus mark of $8,655 million.

MGA currently carries a Zacks Rank #4 (Sell).

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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Autoliv, Inc. (ALV) : Free Stock Analysis Report
 
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Oshkosh Corporation (OSK) : Free Stock Analysis Report
 
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