BorgWarner (BWA)
NYSEConsumer DiscretionaryAuto - PartsSnapshot 2026-09-04
$67.54+2.75%
Close 2026-09-04 · 1-day change
NYSEConsumer DiscretionaryAuto - PartsSnapshot 2026-09-04
Warn: Primary pillar under pressure — Free cash flow near $1B: FCF guidance $900M-$1.1B vs ~$1B target.
BorgWarner is improving net income, rising from a loss to $242M in Q1 2026. The company targets $14.15B revenue and nearly 10% profit margin in 2026. It is expanding into data centers, which could boost growth. Cash flow is expected to improve to about $1B in 2026.
Gross profit and cash from operations have declined sharply, showing weak cost control and cash generation. The recent guidance cut and 17% stock drop reflect risks. If revenue growth slows below 2.7% or margins fall, the turnaround may stall.
The stock trades about 5% below our fair value near $68, reflecting modest 3% revenue growth expected by analysts. Our fair value is 16% below the Street median, indicating cautious optimism. We see risks in margin and cash flow targets.
Breaks if: Free cash flow falls below $850M in FY26
Improve cash flow generation from operations to support investments and capital allocation.
Stated as a priority in 3 of last 3 quarters. Net cash from operating activities rose significantly from $152 million in 2026-Q1 to $586 million in 2026-Q2. Management's 2026 free cash flow guidance is $900 million to $1.1 billion. The trajectory shows delivering improved cash flow generation.
This is not a price target or investment advice.
A long-form read on the 1–3 year hold thesis. It updates when the weekly evidence changes.
This investment represents a durable compounder with a focus on long-term profitable growth. The current thesis state is cautious, as recent performance has not matched industry peers, but management is actively pursuing new business opportunities.
The market seems to price BWA as cheap compared to its peers, with a slight expectations gap indicating that some negative outcomes may already be factored in. The overall valuation is considered justified, reflecting a low fragility tier despite some execution concerns.
Fundamentals are likely to show mixed results in the near term, as management has made progress on margins and earnings, but recent quality metrics have declined. The company operates in a high-miss-rate industry, which adds some uncertainty to future performance.
The thesis hinges on management's ability to maintain guidance and deliver on new business awards. Additionally, broader economic factors, such as inflation trends and performance of sector bellwethers, will play a crucial role in shaping BWA's trajectory.
The most important moves since the prior daily snapshot.
Yes, our read has strengthened. The latest earnings beat supports improved adjusted operating margins and earnings per share. New business awards drive long-term profitable growth.
as of 2026-09-04
Review the evidence to watch, what would become a concern, and what would make it less concerning.
Not investment advice. Scores describe historical and current data; they are not forecasts of future returns. Consult a licensed advisor before making investment decisions.
“Net cash provided by operating activities was $586 million in 2026-Q2.”
“Net cash provided by operating activities was $152 million in 2026-Q1.”
“Net cash provided by operating activities was $619 million in 2025-Q4.”
Breaks if: Net income turns negative again in next 4 quarters
Breaks if: Operating margin falls below 8.5% in FY26
Focus on improving gross profit margin through cost controls and operational efficiencies across segments.
Stated as a priority in 3 of last 3 quarters. Gross profit increased from $677 million in 2026-Q1 to $721 million in 2026-Q2. Management's 2026 guidance targets a gross margin range of 9.7% to 9.9%. The trajectory shows delivering improvement in gross profit and margin.
“Gross profit was $721 million in 2026-Q2, up from $677 million in 2026-Q1.”
“Gross profit was $677 million in 2026-Q1, up from $639 million in 2025-Q1.”
“Gross profit was $731 million in 2025-Q4, with gross margin of 20.5%.”
Breaks if: Annual revenue falls below $13.7B in FY26
Over the next 1 to 3 years, BWA's performance will depend on execution and external economic conditions. Not investment advice.