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New Lifetime High For BorgWarner (BWA)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified BorgWarner ( BWA) as a new lifetime high candidate. In addition to specific proprietary factors, Trade-Ideas identified BorgWarner as such a stock due to the following factors:

  • BWA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $65.7 million.
  • BWA has traded 805,005 shares today.
  • BWA is trading at a new lifetime high.

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More details on BWA:

BorgWarner Inc. manufactures and sells engineered automotive systems and components primarily for powertrain applications worldwide. The stock currently has a dividend yield of 0.9%. BWA has a PE ratio of 20.7. Currently there are 8 analysts that rate BorgWarner a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for BorgWarner has been 680,800 shares per day over the past 30 days. BorgWarner has a market cap of $12.2 billion and is part of the consumer goods sector and automotive industry. The stock has a beta of 1.76 and a short float of 3.6% with 8.16 days to cover. Shares are up 50.7% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates BorgWarner as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity and solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:

  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Auto Components industry average. The net income increased by 65.0% when compared to the same quarter one year prior, rising from $101.10 million to $166.80 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 11.6%. Since the same quarter one year prior, revenues slightly increased by 6.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.35, which illustrates the ability to avoid short-term cash problems.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Auto Components industry and the overall market on the basis of return on equity, BORGWARNER INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Powered by its strong earnings growth of 70.58% and other important driving factors, this stock has surged by 58.78% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.

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