BorgWarner is a product leader in highly engineered components and systems for powertrains around the world. The company was founded in 1987 and is based in Auburn Hills, Michigan.
BWA Price Forecast Based on DCF Valuation
DCF Fair Value Target:
Below please find a table outlining a discounted cash flow forecast for BWA, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that Borgwarner Inc ranked in the 59th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 37.33% on a DCF basis. The most interesting components of our discounted cash flow analysis for Borgwarner Inc ended up being:
Borgwarner Inc's weighted average cost of capital (WACC) is 8%; for context, that number is higher than only 11.09% of tickers in our DCF set.
BWA's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 3%; for context, that number is higher than only 11.09% of tickers in our DCF set.
As a business, Borgwarner Inc experienced a tax rate of about 33% over the past twelve months; relative to its sector (Consumer Cyclical), this tax rate is higher than 85% of stocks generating free cash flow.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Consumer Cyclical that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as BWA, try SON, FLXS, GFASY, GOLF, and NCMI.
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I have an affinity for moat-worthy, behind-the-scenes companies, and BorgWarner (BWA) fits the bill. The stock peaked back in early 2018, at over $57 per share, and is currently trading -31% below that level, at $39.60. While there are some headwinds for the company, I believe the current valuation doesn’t...
American auto component and parts supplier BorgWarner is expected to launch a new high voltage coolant heater for electric and plug-in hybrid cars globally. Exide has tied up with Leclanche to form a joint venture to manufacture Li-ion batteries in India