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What's in the Cards for BorgWarner (BWA) in Q3 Earnings?

Zacks Equity Research
·6-min read

BorgWarner BWA is slated to release third-quarter 2022 results on Oct 27, before the market opens. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share and revenues is pegged at $1.02 and $4 billion, respectively.

For the third quarter, the consensus estimate for BWA’s earnings per share has remained constant in the past 60 days. Its bottom-line estimates imply a rise of 27.5% from the year-ago reported number. The Zacks Consensus Estimate for its quarterly revenues suggests a year-over-year increase of 17.1%. Over the trailing four quarters, BWA surpassed earnings estimates on all occasions, with the average surprise being 29.45%. 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

Q2 Highlights

In second-quarter 2022, BWA’s adjusted earnings per share of $1.05 surpassed the consensus metric of 86 cents. Higher-than-anticipated revenues from Fuel Systems and Aftermarket segments resulted in the outperformance. However, the bottom line fell from the year-ago number of $1.08 a share. The company reported net sales of $3,759 million, outpacing the Zacks Consensus Estimate of $3,690 million. The top line matched the year-ago quarter.

Earnings Whispers

Our proven model predicts an earnings beat for the original equipment manufacturer for the quarter to be reported, as it has the right combination of the two key ingredients. A 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: BWA has an Earnings ESP of +2.21%. This is because the Most Accurate Estimate is pegged 2 cents higher than the Zacks Consensus Estimate.

Zacks Rank: It currently carries a Zacks Rank of 3.

You can see the complete list of today’s Zacks #1 Rank stocks here.

Things to Note

BorgWarner is riding on the strength of strategic acquisitions. The buyout of Rhombus Energy in the third quarter will fuel its Charging Forward strategy and contribute to its EV portfolio in North America and charging business in Europe. This is anticipated to have added to the firm’s quarterly performance. The acquisitions of Delphi Technologies, Santroll light vehicle eMotor business and AKASOL have strengthened its electrification capabilities and e-propulsion leadership. These buyouts are likely to have contributed to BorgWarner’s top-line growth in the to-be-reported quarter. Moreover, the company is poised to gain from its electrification business wins and product launches.

BorgWarner’s Charging Forward project to accelerate its electrification strategy bodes well. As the world is witnessing unprecedented growth in EVs, the OEM player’s hybrid and electric technologies are expected to be major revenue drivers. Riding on the EV success, the firm’s top line might have witnessed growth in the third quarter. The consensus metric for revenues for the quarter indicates a rise from the year-ago reported figure.

On the other hand, BorgWarner has been facing the brunt of chip-related headwinds, aggravated by the Russia-Ukraine war. This, coupled with soaring commodity costs and a difficult labor market, is likely to have dented the company’s margins in the third quarter. SG&A expenses have also been on the rise with technological advancements. This might have hindered the firm’s quarterly profits.

Here's a sneak peek at the firm’s revenue and EBIT projections for the to-be-reported quarter.

The Zacks Consensus Estimate for BorgWarner’s Air Management segment’s sales is pegged at $1,950 million, suggesting a rise from $1,671 million reported in third-quarter 2021. EBIT from the segment is estimated at $260 million, marking an improvement from $214 million recorded in the comparable year-ago period.

The consensus mark for third-quarter sales from the e-Propulsion & Drivetrain segment is pegged at $1,383 million, suggesting an increase from the $1,223 million registered in the year-ago quarter. The segmental EBIT estimate of $129 million also marks a significant increase from $85 million.

The consensus mark for the Fuel Injection unit’s quarterly sales is pegged at $536 million, climbing from $420 million reported a year ago. The EBIT for the segment is pegged at $51 million, indicating a rise from $37 million.

The consensus mark for quarterly sales from the Aftermarket unit is pegged at $267 million, indicating a rise from $227 million recorded in the year-ago quarter. The EBIT for the segment stands at $31.17 million, indicating a rise from $29 million.

Other Stocks With Favorable Combination

Let’s take a look at some other players from the auto space, which, according to our model, have the right combination of elements to post an earnings beat for the quarter to be reported:

Oshkosh OSK will release third-quarter 2022 results on Oct 27. The company has an Earnings ESP of +3.36% and a Zacks Rank #3.

The Zacks Consensus Estimate for Oshkosh’s to-be-reported quarter’s earnings and revenues is pegged at $1.15 per share and $2.15 billion, respectively. OSK surpassed earnings estimates in two of the trailing four quarters and missed in the rest, with the average surprise being a negative 13.62%.

Lear LEA will release third-quarter 2022 results on Nov 1. The company has an Earnings ESP of +3.56% and a Zacks Rank #3.

The Zacks Consensus Estimate for Lear’s to-be-reported quarter’s earnings and revenues is pegged at $2.11 per share and $5.16 billion, respectively. LEA surpassed earnings estimates in three of the trailing four quarters and missed once, with the average surprise being 14.41%.

LCI Industries LCII will release third-quarter 2022 results on Nov 1. The company has an Earnings ESP of +0.96% and a Zacks Rank #3.

The Zacks Consensus Estimate for LCI Industries’ to-be-reported quarter’s earnings and revenues is pegged at $2.43 per share and $1.17 billion, respectively. LCII surpassed earnings estimates in all of the four of the trailing four quarters, with the average surprise being 26.48%.

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


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BorgWarner Inc. (BWA) : Free Stock Analysis Report
 
Lear Corporation (LEA) : Free Stock Analysis Report
 
Oshkosh Corporation (OSK) : Free Stock Analysis Report
 
LCI Industries (LCII) : Free Stock Analysis Report
 
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