Trade-Ideas LLC identified

BorgWarner

(

BWA

) as a "dead cat bounce" (down big yesterday but up big today) 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 $69.2 million.
  • BWA has traded 1.2 million shares today.
  • BWA is up 3% today.
  • BWA was down 5% yesterday.

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More details on BWA:

BorgWarner Inc. develops, manufactures, and sells engineered automotive systems and components primarily for powertrain applications worldwide. The stock currently has a dividend yield of 1.5%. BWA has a PE ratio of 13. Currently there are 6 analysts that rate BorgWarner a buy, 2 analysts rate it a sell, and 6 rate it a hold.

The average volume for BorgWarner has been 2.2 million shares per day over the past 30 days. BorgWarner has a market cap of $7.4 billion and is part of the consumer goods sector and automotive industry. The stock has a beta of 1.88 and a short float of 5.4% with 6.43 days to cover. Shares are down 24.8% year-to-date as of the close of trading on Thursday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates BorgWarner as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 2.8%. Since the same quarter one year prior, revenues rose by 14.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.70, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.98 is somewhat weak and could be cause for future problems.
  • The gross profit margin for BORGWARNER INC is rather low; currently it is at 24.63%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 7.23% is above that of the industry average.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Auto Components industry average. The net income has decreased by 8.3% when compared to the same quarter one year ago, dropping from $178.90 million to $164.10 million.

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