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BorgWarner (BWA) Q3 Earnings Beat Estimates, Guidance Raised

BorgWarner Inc. BWA reported adjusted earnings of 95 cents per share in third-quarter 2017, beating the Zacks Consensus Estimate of 87 cents. Adjusted earnings increased from 78 cents per share reported in the year-ago quarter.

Revenues increased 9.1% year over year to $2.42 million, surpassing the Zacks Consensus Estimate of $2.24 billion. Excluding the impact of foreign currencies and Remy International acquisition, net revenues increased 10.8% year over year.

Operating income amounted to $275.9 million, increasing from $150.3 million in the third quarter of 2016.

Segment Details

Revenues from the Engine segment increased to $1.51 billion from $1.4 billion in the prior-year quarter. Excluding the impact of foreign currencies, net sales rose 8.7% for the segment.

Revenues from the Drivetrain segment increased to $921.8 million in the third quarter from $865.9 million in the prior-year quarter. Excluding the impact of foreign currencies and the buyout of Remy International, net sales rallied 14.4% year over year.

Financial Position

BorgWarner had $414.3 million in cash as of Sep 30, 2017 compared with $443.7 million as of Dec 31, 2016.

As of Sep 30, 2017, long-term debt increased to $2.09 billion from $2.04 billion as of Dec 31, 2016.

In the nine months of 2017, net cash from operating activities increased to $624 million from $593 million in the first nine months of 2016.

In the nine months of 2017, capital expenditures, including tooling outlays, increased to $390 million from $355 million in the first nine months of 2016.

Outlook

For the fourth quarter, the company expects net earnings in the range of 99 cents to $1.01 per share. Moreover, it expects organic sales growth of 5-6.5% compared to net sales of $2.24 billion in the year-ago quarter.

For 2017, the company expects net sales of around $9.67-$9.70 billion against the previous expectation of $9.28-$9.38 billion, which translates into organic growth rate of 9-9.5%. The company expects positive impact of foreign currencies as a result of appreciation of euro of $37 million.

Further, BorgWarner expects net earnings in the range of $3.65-$3.70 per share against the previous expectation of $3.50-$3.60 per share in 2017.

BorgWarner currently has a Zacks Rank #2 (Buy).

A few better-ranked stocks in the auto space include PACCAR Inc PCAR, Fox Factory Holding Corp FOXF and Daimler AG DDAIF.

While PACCAR sports a Zacks Rank #1 (Strong Buy), both Fox Factory Holding and Daimler carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

PACCAR, Fox Factory Holding and Daimler have a long-term expected earnings growth rate of 10%, 14.2%, and 2.8%, respectively.

BorgWarner Inc. Price, Consensus and EPS Surprise

BorgWarner Inc. Price, Consensus and EPS Surprise | BorgWarner Inc. Quote

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