Consumer Sector: Key Updates for February 8-12, 2016
Price movement of BorgWarner
BorgWarner (BWA) rose by 7.8% to close at $31.74 per share at the end of the second week of February 2016. The price movement on a weekly, monthly, and year-to-date (or YTD) basis is 7.8%, -6.2%, and -26.6%, respectively.
At times, the stock has broken the support of all moving day averages. Currently, BWA is trading 7.3% above its 20-day moving average, 13.1% below its 50-day moving average, and 31.5% below its 200-day moving average.
The Vanguard Mid-Cap Growth ETF (VOT) invests 0.69% of its holdings in BorgWarner. The ETF tracks a market-cap-weighted index of midcap growth companies selected by the Center for Research in Security Prices (or CRSP). The YTD price movement of VOT was -14.6% as of February 11, 2016.
The market cap of BorgWarner’s competitors are as follows:
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Honeywell International (HON) — $79.8 billion
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Cummins (CMI) — $17.2 billion
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Tenneco (TEN) — $2.5 billion
Performance of BorgWarner in fiscal 4Q15 and fiscal 2015
BorgWarner (BWA) reported fiscal 4Q15 net sales of $2,123.1 million, a rise of 6.6% compared to net sales of $1,991.9 million in fiscal 4Q14. Sales of engine and drivetrain segments rose by 0.96% and 19.5%, respectively, in fiscal 4Q15, compared to fiscal 4Q14.
Its net income and EPS (earnings per share) fell to $125.3 million and $0.56, respectively, in fiscal 4Q15, compared to $139.9 million and $0.61, respectively, in fiscal 4Q14.
Fiscal 2015 results
In fiscal 2015, BorgWarner reported net sales of $8,023.2 million, a fall of 3.4% YoY (year-over-year). Its net income and EPS fell to $609.7 million and $2.70, respectively, in fiscal 2015, compared to $655.8 million and $2.86, respectively, in fiscal 2014.
Meanwhile, its cash and cash equivalents fell by 27.6%, and inventories rose by 43.1% in fiscal 2015. Its current ratio fell to 1.3x, and long-term debt-to-equity rose to 0.59x in fiscal 2015, compared to a current ratio and long-term debt-to-equity ratio of 1.4x and 0.19x, respectively, in fiscal 2014.
The company has declared a quarterly cash dividend of $0.13 per share on its common stock. The dividend will be paid on March 15, 2016, to shareholders of record at the close of business on March 1, 2016.
The PE (price-to-earnings) and PBV (price-to-book value) ratios of BorgWarner are 11.8x and 2.0x, respectively, as of February 12, 2016.
Projection
The company has made the following projections for fiscal 1Q16 and fiscal 2016:
Fiscal 1Q16
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Net sales growth in the range of 8.3%–13.3%. After excluding the impact of foreign currencies and the Remy acquisition, net sales growth is expected to be in the range of -0.3%–2.7%.
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EPS in the range of $0.75–$0.79. After excluding the Remy acquisition, EPS is expected to be in the range of $0.72–$0.76.