Never miss an important update on your stock portfolio and cut through the noise. Over 7 million investors trust Simply Wall St to stay informed where it matters for FREE.
-
If you are wondering whether BorgWarner’s share price still offers value at current levels, you are not alone. This article will focus on what the numbers actually say about the stock.
-
BorgWarner’s stock closed at US$47.41, with returns of 5.2% over the last 30 days and 50.9% over the last year. These returns may have changed how investors think about both its potential and its risks.
-
Recent attention on BorgWarner has centered on its positioning in the auto components space and how investors are weighing its role in longer term industry trends. That backdrop helps explain why some market participants are starting to reassess what a reasonable price for the shares might be.
-
Right now BorgWarner scores 2 out of 6 on our valuation checks. Next we will look at what different valuation approaches suggest about the stock today and finish with a way to think about value that goes beyond the usual multiples.
BorgWarner scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
A Discounted Cash Flow, or DCF, model estimates what a company might be worth by projecting its future cash flows and then discounting those back to today’s value. It is essentially asking what all those future dollars are worth in today’s terms.
For BorgWarner, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month Free Cash Flow is about $1.04b. Analysts provide explicit Free Cash Flow estimates out to 2030, with projections such as $1,044.24m for 2026 and $1,040m for 2030. Beyond the analyst horizon, Simply Wall St extrapolates additional estimates through 2035, all in the range of just over $1b a year in Free Cash Flow.
When all of these projected cash flows are discounted back, the DCF model suggests an intrinsic value of about $71.71 per share. Compared with the recent share price of $47.41, this output implies the stock is 33.9% undervalued according to this method.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests BorgWarner is undervalued by 33.9%. Track this in your watchlist or portfolio, or discover 868 more undervalued stocks based on cash flows.
For a profitable company, the P/E ratio is a useful way to see how much you are paying for each dollar of earnings. It ties the share price directly to current earnings, which is often where investors focus first.
What counts as a “normal” P/E depends on how the market sees a company’s growth potential and risk. Higher expected growth or lower perceived risk can support a higher P/E, while slower growth or higher risk usually points to a lower one.
BorgWarner currently trades on a P/E of 74.58x, compared with an Auto Components industry average of 23.59x and a peer group average of 23.68x. Simply Wall St’s “Fair Ratio” for BorgWarner is 18.01x. This Fair Ratio is a proprietary estimate of the P/E the company might warrant given factors such as its earnings growth profile, industry, profit margins, market cap and risk characteristics.
Because the Fair Ratio explicitly blends these company specific inputs, it can be more informative than a simple comparison with peers or the industry, which may have very different fundamentals. On this view, BorgWarner’s current P/E sits well above the Fair Ratio, which points to the stock looking expensive on earnings.
Result: OVERVALUED
P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1417 companies where insiders are betting big on explosive growth.
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply your story about a company tied directly to your view of its fair value and its future revenue, earnings and margins.
On Simply Wall St’s Community page, millions of investors use Narratives to plug in their expectations, see the resulting forecast and fair value, and then compare that fair value with the current share price to help decide whether the stock looks attractive or stretched for their own goals.
Because each Narrative is connected to live data, it updates when fresh information such as news or earnings is added, so your view of BorgWarner is not frozen in time but keeps reflecting what is happening.
For example, one BorgWarner Narrative might assume a higher fair value based on confidence in its auto components position, while another might use a lower fair value based on more cautious assumptions about future margins and revenue. Yet both investors can clearly see how their story translates into numbers and a price comparison.
Do you think there’s more to the story for BorgWarner? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
Companies discussed in this article include BWA.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com