Yahoo Finance Results: BorgWarner Inc. Beat Earnings Expectations And Analysts Now Have New Forecasts
BorgWarner Inc. (NYSE:BWA) defied analyst predictions to release its full-year results, which were ahead of market expectations. The company beat both earnings and revenue forecasts, with revenue of US$10b, some 2.9% above estimates, and statutory earnings per share (EPS) coming in at US$2.34, 66% ahead of expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on BorgWarner after the latest results.
Check out our latest analysis for BorgWarner
Following the latest results, BorgWarner's 15 analysts are now forecasting revenues of US$15.0b in 2021. This would be a sizeable 47% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 35% to US$3.16. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$14.6b and earnings per share (EPS) of US$3.49 in 2021. So it's pretty clear consensus is mixed on BorgWarner after the latest results; whilethe analysts lifted revenue numbers, they also administered a minor downgrade to per-share earnings expectations.
The consensus price target was unchanged at US$47.83, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on BorgWarner, with the most bullish analyst valuing it at US$64.00 and the most bearish at US$27.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that BorgWarner's rate of growth is expected to accelerate meaningfully, with the forecast 47% revenue growth noticeably faster than its historical growth of 2.9%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 16% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that BorgWarner is expected to grow much faster than its industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for BorgWarner. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple BorgWarner analysts - going out to 2024, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 6 warning signs for BorgWarner that you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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