A Look at BorgWarner’s Valuation After Strong Q2 Results, Upgraded Outlook, and Major Electrification Wins

BorgWarner (NYSE:BWA) caught investors’ attention after reporting better-than-expected second quarter results and boosting its full-year guidance. The company also revealed several new electrification contracts across key global markets and significantly raised its dividend.

See our latest analysis for BorgWarner.

BorgWarner’s stock has picked up serious momentum in 2025, jumping over 37% on a share price basis since the start of the year as a result of upbeat results and aggressive moves into vehicle electrification. The 12-month total shareholder return stands at 27.7%, highlighting steadily building investor confidence as management delivers on growth and returns more cash to shareholders.

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Despite this surge in performance and optimism surrounding electrification, some investors may wonder whether BorgWarner’s shares remain undervalued or if the recent rally means the market has already priced in future growth.

Most Popular Narrative: 12.7% Undervalued

BorgWarner’s most-followed narrative points to a fair value noticeably higher than the recent closing price. Rapid contract wins and a clear strategic focus have caught analysts' attention, setting an optimistic tone for what might come next.

Expanding platform wins, particularly with major Chinese OEMs for inverters, electric motors, and differential technologies, reflect deeper integration into next-generation EV architectures and can drive higher content per vehicle. This may strengthen long-term earnings visibility through recurring, higher-margin supply contracts.

Read the complete narrative.

Want to understand how revenue growth and earnings power drive this valuation? This narrative builds its fair value on bold future profit margins and a key financial leap. The underlying math will surprise even seasoned investors. Discover the forecast shifts that underpin this bullish outlook.

Result: Fair Value of $49.21 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent dependence on combustion products and ongoing volatility in battery and charging segments could limit near-term earnings visibility for BorgWarner's growth story.

Find out about the key risks to this BorgWarner narrative.

Another View: Valuing with Market Multiples

While fair value estimates are optimistic, the market tells a different story. BorgWarner is trading at a steep price-to-earnings ratio of 67.6x, much higher than the US Auto Components industry average of 24.5x and the fair ratio of 17.1x. Such a premium could limit near-term upside if earnings growth stumbles. Does the market see something others are missing, or is optimism running ahead of fundamentals?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own BorgWarner Narrative

If you want a fresh perspective or want to put the numbers to the test yourself, you can easily build your own narrative in just a few minutes. Do it your way

A great starting point for your BorgWarner research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.

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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.

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