BorgWarner Inc. Common Stock (BWA)

FairStock Score: 43/100 — MIXED

Key Financials

Strengths

• Generates $984 million in annual free cash flow (8.5% yield on market cap)
• Established organization with 37,500 employees providing operational scale

Concerns

• Trades significantly above Graham Number ($28) with negative 103% margin of safety—limited downside protection
• Currently unprofitable—sustained losses could lead to dilutive capital raises or balance sheet deterioration

AI Analysis

BorgWarner Inc. Common Stock is a mid-cap consumer cyclical company valued at $11.6 billion. Revenue stands at $14.3 billion, though the company is currently unprofitable. From a quality standpoint, BorgWarner shows solid Piotroski F-Score of 6/9 and Altman Z-Score of 2.2 in the grey zone. On valuation, the stock is commanding a steep 43.9x multiple, with trades far above its Graham Number ($28) with no margin of safety. Growth dynamics show revenue growing at 3.9% and profit growth of 35.3%. The 1.2% dividend yield adds an income component for patient holders. Our composite FairStock Score of 43/100 reflects below-average fundamentals overall. Without profitability, this remains speculative—suitable only for those with high risk tolerance and a long time horizon.

Bull Case

Improving fundamentals and sector tailwinds could drive meaningful earnings growth, compressing the effective multiple for patient investors. With $984 million in annual free cash flow (8.5% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 44x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Sluggish 4% growth in a large-cap company leaves the stock vulnerable to de-rating if the market rotates toward higher-growth opportunities.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer