Value
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 3.0 |
| P/S | 9.7 |
| EV/EBITDA | 7.0 |
| Fwd P/E | 9.1 |
| PEG | 9.5 |
| Analyst target | 4.0 |
- ▸Forward P/E: 11.6x
- ▸PEG: 0.58
- ▸Attractively valued
BWA · Why this verdict
Why BorgWarner (BWA) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.2/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
BorgWarner has posted 3 beats in its last 4 quarters with consensus estimates rising 5.2% in the past 30 days and free cash flow converting at 280% of reported net income — but with 71% of revenue concentrated in 10 customers, 84% generated outside the United States, and price momentum below the minimum entry threshold, the risk/reward at current prices — 5.1% upside to resistance against a 0.73-to-1 reward/risk ratio — supports holding rather than adding.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Consensus earnings estimates have risen 5.2% in the past 30 days and the company has beaten in 3 of its last 4 quarters, a combination that historically precedes further upward revisions and provides near-term fundamental support for the stock. Catalyst breakdown | Earnings estimates continue to rise by at least 5% over the next two quarters, driven by sustained delivery above the Street's expectations. | →Stable |
| CounterThe most recent beat came at only 6% above estimates — a meaningful moderation from the prior quarter's 13.5% — and with the stock trading near analyst targets, further estimate increases may not translate into additional price appreciation. | ||
With only 5.1% headroom to the near-term resistance target and a reward-to-risk ratio of 0.73-to-1, the current price offers inadequate compensation for the downside exposure, making new purchases unattractive even against an improving fundamental backdrop. Price targets | A pullback of at least 7% from current levels resets the entry geometry to a more favorable reward-to-risk ratio above 1.5-to-1. | →Stable |
| CounterPositive news sentiment and rising estimates may sustain the stock through the resistance level; if the earnings beat streak extends, analyst targets adjust higher and the current entry proves adequate in retrospect. | ||
With 71% of revenue coming from the top 10 customers and 84% generated outside the United States, a disruption at any major account or a sustained adverse shift in global trade conditions would have a disproportionate impact on reported results. Bear case | Revenue from the top 10 customers falls below 60% of total revenue over 4 consecutive quarters as the company broadens its customer base. | →Stable |
| CounterA concentrated but stable customer roster provides long-term revenue visibility and contract predictability; if the top customers sustain or grow their business, the concentration becomes a source of earnings quality rather than a structural vulnerability. | ||
Price momentum has slipped below the minimum threshold required for new position entry, with on-balance volume in distribution — the technical setup does not support adding exposure at current levels. Engine gate (failed) | The soft momentum condition and negative asymmetry persist for at least 2 more quarters before recovering to a level that clears the entry bar. | →Stable |
| CounterThe stock remains above its 200-day moving average, and two consecutive recent earnings beats alongside rising estimate revisions may rebuild momentum without requiring a meaningful pullback, rendering the current gate breach temporary. | ||
Consensus earnings estimates have risen 5.2% in the past 30 days and the company has beaten in 3 of its last 4 quarters, a combination that historically precedes further upward revisions and provides near-term fundamental support for the stock.
→StableCatalyst breakdown
- Expectation
- Earnings estimates continue to rise by at least 5% over the next two quarters, driven by sustained delivery above the Street's expectations.
CounterThe most recent beat came at only 6% above estimates — a meaningful moderation from the prior quarter's 13.5% — and with the stock trading near analyst targets, further estimate increases may not translate into additional price appreciation.
With only 5.1% headroom to the near-term resistance target and a reward-to-risk ratio of 0.73-to-1, the current price offers inadequate compensation for the downside exposure, making new purchases unattractive even against an improving fundamental backdrop.
→StablePrice targets
- Expectation
- A pullback of at least 7% from current levels resets the entry geometry to a more favorable reward-to-risk ratio above 1.5-to-1.
CounterPositive news sentiment and rising estimates may sustain the stock through the resistance level; if the earnings beat streak extends, analyst targets adjust higher and the current entry proves adequate in retrospect.
With 71% of revenue coming from the top 10 customers and 84% generated outside the United States, a disruption at any major account or a sustained adverse shift in global trade conditions would have a disproportionate impact on reported results.
→StableBear case
- Expectation
- Revenue from the top 10 customers falls below 60% of total revenue over 4 consecutive quarters as the company broadens its customer base.
CounterA concentrated but stable customer roster provides long-term revenue visibility and contract predictability; if the top customers sustain or grow their business, the concentration becomes a source of earnings quality rather than a structural vulnerability.
Price momentum has slipped below the minimum threshold required for new position entry, with on-balance volume in distribution — the technical setup does not support adding exposure at current levels.
→StableEngine gate (failed)
- Expectation
- The soft momentum condition and negative asymmetry persist for at least 2 more quarters before recovering to a level that clears the entry bar.
CounterThe stock remains above its 200-day moving average, and two consecutive recent earnings beats alongside rising estimate revisions may rebuild momentum without requiring a meaningful pullback, rendering the current gate breach temporary.
Per-dimension breakdown
Quality
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.4 |
| ROA | 4.2 |
| Gross margin | 0.0 |
| Op margin | 4.0 |
| Net margin | 1.3 |
| Current ratio | 7.4 |
| FCF quality | 10.0 |
| Moat | 4.5 |
| Piotroski F | 8.9 |
- ▸Excellent cash conversion: 280% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 8/9
Growth
6.3/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 2.6 |
| EPS growth | 10.0 |
Momentum
3.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 7.9 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 6.0 |
| Volume | 0.0 |
- ▸Uptrend pullback (RSI 36) - buy opportunity
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.3 |
| Price target | 6.4 |
| erm sentiment | 7.1 |
- ▸Estimates rising as sentiment proxy (+5.2%)
Insider
3.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Modest insider selling — $5,721,275 (0.041% of mkt cap)
Peer rank
1.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 2.7 |
| quality rank | 4.2 |
| growth rank | 0.4 |
Technical
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 8.4 |
| support resistance | 8.0 |
| 52w position | 7.6 |
| gap | 5.0 |
Risk (lower is worse)
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.2 |
| days to cover | 8.1 |
| volatility | 1.0 |
| put call | 0.0 |
| implied vol | 4.5 |
| max pain risk | 3.0 |
| beta | 6.7 |
| debt equity | 6.7 |
- ▸Elevated put/call: 3.27
- ▸Above max pain $25
- ▸Concentration risks: 2 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 8.5 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 7.0 |
| dividend safety | 5.2 |
- ▸Estimates up 5.2% (30d)
- ▸Perfect beat streak: 4Q
- ▸Dividend: 100.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position. | News modifier +1 (SELL_IF_HOLDING → HOLD_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_F_SELL|L3:NEWS_MOD=+1Passed (5)
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:41d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.0<4.5
- ASYMMETRY:-0.1=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.13
Upside
-1.2%
Downside
9.2%
Sizing output
AVOID
SetupUNKNOWN — No clear chart pattern; technical signals are mixed
EdgeNO_EDGE — No clear edge identified
SuitabilityMODERATE — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.2 below the 5.4 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Technical at 7.2) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:3.0<4.5, ASYMMETRY:-0.1=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.13 — supplementary context, not the trigger for this path.
The strongest dimensions are Technical at 7.2, Value at 7.1, and Catalyst at 7.1; the weakest are Peer rank at 1.8, Momentum at 3.0, and Insider at 3.9. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of -0.13 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1With 71% of revenue coming from the top 10 customers and 84% generated outside the United States, a disruption at any major account or a sustained adverse shift in global trade conditions would have a disproportionate impact on reported results.
Trip ifRevenue from the top 10 customers falls below 60% of total revenue for 2 consecutive annual reporting periods.
- P2Price momentum has slipped below the minimum threshold required for new position entry, with on-balance volume in distribution — the technical setup does not support adding exposure at current levels.
Trip ifRSI rises above 65 and the stock closes at a new 52-week high for 2 consecutive weeks, confirming a momentum recovery.
- P3Consensus earnings estimates have risen 5.2% in the past 30 days and the company has beaten in 3 of its last 4 quarters, a combination that historically precedes further upward revisions and provides near-term fundamental support for the stock.
Trip ifConsensus EPS estimates are revised downward by more than 10% over any 2-month period, reversing the upward revision trend.
- P4With only 5.1% headroom to the near-term resistance target and a reward-to-risk ratio of 0.73-to-1, the current price offers inadequate compensation for the downside exposure, making new purchases unattractive even against an improving fundamental backdrop.
Trip ifPrice breaks above $77.24 (the take-profit level) and holds for 3 consecutive weeks, eliminating the limited-upside concern.