BorgWarner Inc. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

BorgWarner Inc. (NYSE:BWA) shareholders are probably feeling a little disappointed, since its shares fell 5.0% to US$31.80 in the week after its latest yearly results. Revenues were in line with forecasts, at US$14b, although statutory earnings per share came in 16% below what the analysts expected, at US$2.70 per share. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for BorgWarner

After the latest results, the 16 analysts covering BorgWarner are now predicting revenues of US$14.7b in 2024. If met, this would reflect an okay 3.6% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to bounce 35% to US$3.72. Before this earnings report, the analysts had been forecasting revenues of US$15.3b and earnings per share (EPS) of US$4.15 in 2024. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.

The analysts made no major changes to their price target of US$42.12, suggesting the downgrades are not expected to have a long-term impact on BorgWarner's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on BorgWarner, with the most bullish analyst valuing it at US$72.00 and the most bearish at US$33.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that BorgWarner's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 3.6% growth on an annualised basis. This is compared to a historical growth rate of 11% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 11% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than BorgWarner.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$42.12, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for BorgWarner going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for BorgWarner you should be aware of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.