June 20, 2024
Top 10 Stock BorgWarner Strong Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: BorgWarner – Top 10 Stock in S&P 500 Consumer Discretionary Index
BorgWarner is listed as a top 10 stock on June 20, 2024 in the market index S&P US Luxury because of its high performance in at least one of the Obermatt investment strategies. As three out of four consolidated Obermatt Ranks exhibit excellent performance, it is a solid investment where the risk of paying too much for the shares is low, despite a currently slow growth momentum. Based on the Obermatt 360° View of 89 (top 89% performer), Obermatt assesses an overall strong buy recommendation for BorgWarner on June 20, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Auto Parts & Equipment |
| Index | Electromobility, S&P US Luxury, S&P 500 |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View BorgWarner Strong Buy
| 360 METRICS | June 20, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 78 |
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| GROWTH | ||||||||
| GROWTH | 35 |
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| SAFETY | ||||||||
| SAFETY | 81 |
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| SENTIMENT | ||||||||
| SENTIMENT | 72 |
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| 360° VIEW | ||||||||
| 360° VIEW | 89 |
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ANALYSIS: With an Obermatt 360° View of 89 (better than 89% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock BorgWarner are very positive. The 360° View is based on consolidating four consolidated indicators, with half of the indicators below and half above average for BorgWarner. The consolidated Value Rank has an attractive rank of 78, which means that the share price of BorgWarner is on the lower side compared with typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 78% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 81. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 72. But the consolidated Growth Rank has a low rank of 35, which means that the company is below average in terms of growth and momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. 65 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 89, BorgWarner is better positioned than 89% of all alternative stock investment opportunities based on the Obermatt Method. Three out of four consolidated Obermatt Ranks show above-average performance. The stock has as good value (Value Rank of 78), secure financing practices (Safety Rank of 81), and positive market sentiment in the professional investor community (Sentiment Rank of 72). It is a solid stock investment where the risk of paying too much for the shares is limited, and disappointments are less likely to occur. The company’s growth expectations are below the industry average (Growth Rank of 35), but that could also be temporary since professional investors remain optimistic despite the low growth numbers. The low price as reflected in the good Value Rank could indicate that the company's future is challenging. The below-par growth performance may be the reason for this. Companies that grow less are typically cheaper than fast-growing competitors. We recommend evaluating whether the future of BorgWarner is as difficult as the stock’s low price suggests, despite the positive professional investor sentiment. Since the professional community is optimistic, you might have less to worry about, and the stock may just go through a more challenging phase now, indicating good timing. ...read more
Sentiment Strategy: Professional Market Sentiment for BorgWarner positive
ANALYSIS: With an Obermatt Sentiment Rank of 72 (better than 72% compared with alternatives), overall professional sentiment and engagement for the stock BorgWarner is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for BorgWarner. Analyst Opinions are at a rank of 45 (worse than 55% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 54, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in BorgWarner. Even better, the Professional Investors rank is 63, meaning that professional investors hold more stock in this company than in 63% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 81, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 81% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 72 (more positive than 72% compared with investment alternatives), BorgWarner has a reputation among professional investors that is above-average compared with that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: BorgWarner Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 78 (better than 78% compared with alternatives) for 2024, BorgWarner shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for BorgWarner. Price-to-Sales is 57 which means that the stock price compared with what market professionals expect for future sales is lower than for 57% of comparable companies, indicating a good value for BorgWarner's revenue size. The same is valid for expected Price-to-Profits, more favorable than for 81% of alternatives, and this is also true for the Price-to-Book capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 76. Compared with other companies in the same industry, dividend yields of BorgWarner are expected to be higher than for 63% of all competitors (a Dividend Yield rank of 63). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 78, is a buy recommendation based on BorgWarner's stock price compared with the company's operational size and dividend yields. Since all value metrics are above the industry average, there is no objection to investing in BorgWarner based on its detailed value metrics.
Growth Strategy: BorgWarner Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 35 (better than 35% compared with alternatives), BorgWarner shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with three out of four indicators below-average for BorgWarner. While Sales Growth ranks at 55, professionals currently expect the company to grow more than 55% of its competitors, while all other growth ranks are below the market median. Profit Growth has a rank of 49, which means that, currently, professionals expect the company to grow its profits less than 51% of its competitors, and Capital Growth has a low rank of 28. Historic stock returns were also below average with a current Stock Returns rank of 35 which means that the stock returns have recently been below 65% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 35, is a hold recommendation for growth and momentum investors. If revenues are expected to increase, but all other growth indicators are negative, the company may be investing in future growth through means not visible in the balance sheet and thus not reflected in capital growth. The fact that Stock Returns have been below market doesn't mean that much, as it may be due to overly optimistic investor behavior in the past, which has been corrected to a more reasonable level recently. If that were the case, a positive Value Rank would be a reason to invest because the company is still expected to grow, while stock prices are now at a more reasonable level. ...read more
Safety Strategy: BorgWarner Debt Financing Safety very solid
| SAFETY METRICS | June 20, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 43 |
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| REFINANCING | ||||||||
| REFINANCING | 57 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 91 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 81 |
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ANALYSIS: With an Obermatt Safety Rank of 81 (better than 81% compared with alternatives) for 2024, the company BorgWarner has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of BorgWarner is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above-average for BorgWarner. Refinancing is at 57, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 57% of its competitors. Liquidity is also good at 91, meaning the company generates more profit to service its debt than 91% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 43, which means the company has an above-average debt-to-equity ratio. It has more debt than 57% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 81 (better than 81% compared with alternatives), BorgWarner has a financing structure that is significantly safer than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and BorgWarner could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. ...read more
Combined financial peformance: BorgWarner Top Financial Performance
| COMBINED PERFORMANCE | June 20, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 78 |
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| GROWTH | ||||||||
| GROWTH | 35 |
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| SAFETY | ||||||||
| SAFETY | 91 |
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| COMBINED | ||||||||
| COMBINED | 87 |
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ANALYSIS: With an Obermatt Combined Rank of 87 (better than 87% compared with investment alternatives), BorgWarner (Auto Parts & Equipment, USA) shares have much better financial characteristics than comparable stocks. Shares of BorgWarner are a good value (attractively priced) with a consolidated Value Rank of 78 (better than 78% of alternatives), are safely financed (Safety Rank of 81, which means low debt burdens), but show below-average growth (Growth Rank of 35). ...read more
RECOMMENDATION: A Combined Rank of 87, is a strong buy recommendation based on BorgWarner's financial characteristics. As the company BorgWarner's key financial metrics exhibit good value (Obermatt Value Rank of 78) but low growth (Obermatt Growth Rank of 35) while being safely financed (Obermatt Safety Rank of 81), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 78% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. ...read more
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