Thursday, July 28, 2011

BorgWarner (BWA) Booms on Beat and Raise

BorgWarner (BWA) continues to be amongst the most impressive of the auto supplier companies.  This morning the company beat on EPS (by 13 cents) and revenue, and raised guidance on both the top and bottom line.  Their business lines continue to be in the sweet spot to take advantage of actual organic growth in the industry.  28% revenue growth while global auto production was down 2% says it all.  Full report here.

The stock has been 'hanging around' for most of 2011, as the sector has fallen out of favor with the investor class.  Most recently after creating a double top with April and July highs, the stock has been beaten quite badly but is reversing that in dramatic fashion this morning.

Via Reuters:

  • Auto parts supplier BorgWarner Inc (BWA) reported a higher-than-expected quarterly profit on Thursday, driven by increased demand for its fuel-economy technologies.  The company, which makes turbochargers, transmission components and other parts, also raised its forecast for 2011 earnings and revenue. It now expects $4.25 to $4.45 per share on an adjusted basis, on a revenue increase of 25 percent to 28 percent.  It previously forecast 2011 earnings of $3.85 to $4.15 per share on a revenue rise of 19 percent to 23 percent.
  • BorgWarner has benefited from increased demand from automakers for its technology to improve engine efficiency and reduce emissions.  That demand has been driven by high gas prices and a move toward stricter emissions standards by the U.S. government.
  • Excluding a patent infringement settlement payment from Honeywell International Inc (HON) and an adjustment related to taxes, BorgWarner earned $1.12 per share in the latest quarter. On that basis, analysts' average forecast was 99 cents, according to Thomson Reuters I/B/E/S.  Sales rose 28 percent to $1.8 billion.
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