October 19, 2023
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 Electromobility & Hydrogen
BorgWarner is listed as a top 10 stock on October 19, 2023 in the market index Electromobility 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 92 (top 92% performer), Obermatt assesses an overall strong buy recommendation for BorgWarner on October 19, 2023.
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 | October 19, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 76 |
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| GROWTH | ||||||||
| GROWTH | 41 |
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| SAFETY | ||||||||
| SAFETY | 82 |
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| SENTIMENT | ||||||||
| SENTIMENT | 80 |
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| 360° VIEW | ||||||||
| 360° VIEW | 92 |
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ANALYSIS: With an Obermatt 360° View of 92 (better than 92% compared with alternatives) for 2023, 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 76, 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 76% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 82. In addition, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 80. But the consolidated Growth Rank has a low rank of 41, 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. 59 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 92, BorgWarner is better positioned than 92% 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 76), secure financing practices (Safety Rank of 82), and positive market sentiment in the professional investor community (Sentiment Rank of 80). 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 41), 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 very positive
ANALYSIS: With an Obermatt Sentiment Rank of 80 (better than 80% compared with alternatives) for 2023, overall professional sentiment and engagement for the stock BorgWarner is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all four indicators above average for BorgWarner. Analyst Opinions are at a rank of 64 (better than 64% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. Analyst Opinions Change is also positive with a rank of 63, which means that stock research experts are changing their opinions for the better and recommending investing in the company. They are getting more optimistic about stock investments in BorgWarner. The Professional Investors rank is 68, which means that currently, professional investors hold more stock in this company than in 68% of alternative investment opportunities. Pros tend to favor investing in this company. Finally, Market Pulse has a rank of 59 which means that the current professional news and professional social networks are on the positive side when discussing this company (more positive news than for 59% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 80 (more positive than 80% compared with investment alternatives), BorgWarner has a reputation among professional investors that is significantly higher than that of its competitors. Since all market sentiment indicators are positive, the professional community highly recommends investment in the company. Does this mean BorgWarner stocks are a safe investment? Far from it. Even professionals make mistakes. Especially in stock investing, there is a tendency to follow the leaders. Since trees don't grow to the heavens, such positive sentiment may also be interpreted as a danger sign. A lot of optimism can often be a sign of troubles to come, albeit unforeseen by most. ...read more
Value Strategy: BorgWarner Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 76 (better than 76% compared with alternatives) for 2023, 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 54 which means that the stock price compared with what market professionals expect for future sales is lower than for 54% 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 71% 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 79. Compared with other companies in the same industry, dividend yields of BorgWarner are expected to be higher than for 58% of all competitors (a Dividend Yield rank of 58). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 76, 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 41 (better than 41% 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 half of the indicators below and half above average for BorgWarner. Sales Growth has a rank of 63 which means that currently professionals expect the company to grow more than 63% of its competitors. Stock Returns are also above average with a rank of 75. But Capital Growth has only a rank of 29, which means that currently professionals expect the company to grow its invested capital less than 71% of its competitors. Profit Growth is also low, with a rank of only 22, which means that, currently, professionals expect the company to grow its profits below average. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 41, is a hold recommendation for growth and momentum investors. This is a surprising picture, as the messages from the operating growth indicators of revenues, profits, and invested capital are mixed, while stock returns are above average. It may indicate new intellectual properties, such as brand improvement or a strong market position that shows in revenues but not in the capital. The low profit-growth rate may indicate an early phase where costs are still high, and revenues don't fully cover upfront investments or fixed costs. The positive investor outlook with a 75% peer outperformance is reaffirmed in this case which may be a good sign for an investment into a well-protected high-growth company. This fact needs to be confirmed by researching the company website and press. ...read more
Safety Strategy: BorgWarner Debt Financing Safety very solid
| SAFETY METRICS | October 19, 2023 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 48 |
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| REFINANCING | ||||||||
| REFINANCING | 58 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 85 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 82 |
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ANALYSIS: With an Obermatt Safety Rank of 82 (better than 82% compared with alternatives) for 2023, 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 58, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 58% of its competitors. Liquidity is also good at 85, meaning the company generates more profit to service its debt than 85% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 48, which means the company has an above-average debt-to-equity ratio. It has more debt than 52% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 82 (better than 82% 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 | October 19, 2023 | |||||||
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| VALUE | ||||||||
| VALUE | 76 |
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| GROWTH | ||||||||
| GROWTH | 41 |
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| SAFETY | ||||||||
| SAFETY | 85 |
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| COMBINED | ||||||||
| COMBINED | 90 |
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ANALYSIS: With an Obermatt Combined Rank of 90 (better than 90% 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 76 (better than 76% of alternatives), are safely financed (Safety Rank of 82, which means low debt burdens), but show below-average growth (Growth Rank of 41). ...read more
RECOMMENDATION: A Combined Rank of 90, 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 76) but low growth (Obermatt Growth Rank of 41) while being safely financed (Obermatt Safety Rank of 82), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 76% 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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