Value
8.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.9 |
| P/S | 9.8 |
| EV/EBITDA | 8.2 |
| Fwd P/E | 9.5 |
| PEG | 10.0 |
| Analyst target | 9.0 |
- ▸Forward P/E: 8.8x
- ▸PEG: 0.24
- ▸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. How we score · Editorial policy
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VerdictHOLD
Overall score5.6/10
ConfidenceHIGH
MacroRISK_OFF
TrendMatrix Research · core thesis
Engine thesis — one sentence
BWA is cheap at 8.7x forward P/E with 37.8% upside to the analyst target and excellent 209% cash conversion, but heavy customer and geographic concentration, an oversold downtrend and insider selling argue for caution.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Cash conversion is excellent at 209% FCF/NI, and earnings growth scores 10.0/10, even though the business has no competitive moat. Quality breakdown | Free cash flow stays above net income. | ↓Deteriorating |
| CounterNet margin scores only 1.7/10, so a high FCF/NI ratio may reflect a small denominator and depreciation rather than strength. | ||
At $51.63 the stock trades at 8.7x forward P/E and is 37.8% below the $71.16 analyst target against 7.7% downside, a reward-to-risk of 4.9. Upside pct | Price moves toward the $71.16 target if earnings hold. | ↑Improving |
| CounterLow multiples on auto parts often reflect cyclical risk, and targets lag a falling price. | ||
Concentration is high: the top ten customers account for 71.0% of revenue and 84.0% of exposure is outside the United States. Bear case | Concentration stays above 60% in the top ten customers. | →Stable |
| CounterLarge automaker relationships are long-term contracts, and global diversification reduces dependence on any single market. | ||
Momentum is negative at 2.5/10, with RSI at 17, falling OBV and the price below the 200-day average, although that average is still rising 3.6% per 30 days. Momentum breakdown | Momentum stabilizes before price recovers above the 200-day average. | →Stable |
| CounterRSI 17 with a volume surge is a classic oversold setup, and the rising 200-day average points to a pullback in an uptrend. | ||
Insiders sold $5,420,379 net (8 sales) in 90 days, and revenue is declining 3%. Insider | Insider selling continues while revenue stays flat or lower. | →Stable |
| CounterThe sales are 0.052% of market cap and may be routine, and a 3% revenue decline is modest. | ||
Cash conversion is excellent at 209% FCF/NI, and earnings growth scores 10.0/10, even though the business has no competitive moat.
↓DeterioratingQuality breakdown
- Expectation
- Free cash flow stays above net income.
CounterNet margin scores only 1.7/10, so a high FCF/NI ratio may reflect a small denominator and depreciation rather than strength.
At $51.63 the stock trades at 8.7x forward P/E and is 37.8% below the $71.16 analyst target against 7.7% downside, a reward-to-risk of 4.9.
↑ImprovingUpside pct
- Expectation
- Price moves toward the $71.16 target if earnings hold.
CounterLow multiples on auto parts often reflect cyclical risk, and targets lag a falling price.
Concentration is high: the top ten customers account for 71.0% of revenue and 84.0% of exposure is outside the United States.
→StableBear case
- Expectation
- Concentration stays above 60% in the top ten customers.
CounterLarge automaker relationships are long-term contracts, and global diversification reduces dependence on any single market.
Momentum is negative at 2.5/10, with RSI at 17, falling OBV and the price below the 200-day average, although that average is still rising 3.6% per 30 days.
→StableMomentum breakdown
- Expectation
- Momentum stabilizes before price recovers above the 200-day average.
CounterRSI 17 with a volume surge is a classic oversold setup, and the rising 200-day average points to a pullback in an uptrend.
Insiders sold $5,420,379 net (8 sales) in 90 days, and revenue is declining 3%.
→StableInsider
- Expectation
- Insider selling continues while revenue stays flat or lower.
CounterThe sales are 0.052% of market cap and may be routine, and a 3% revenue decline is modest.
Per-dimension breakdown
Quality
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.0 |
| ROA | 4.3 |
| Gross margin | 0.0 |
| Op margin | 3.9 |
| Net margin | 1.7 |
| Current ratio | 5.2 |
| FCF quality | 10.0 |
| Moat | 3.9 |
| Piotroski F | 6.7 |
- ▸Excellent cash conversion: 209% FCF/NI
- ▸No competitive moat
Growth
5.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.8 |
| EPS growth | 10.0 |
- ▸Declining revenue: -3%
Momentum
1.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.0 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 2.2 |
| Volume | 2.4 |
- ▸Capitulation risk (RSI 17, below 200MA)
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+3.3%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
7.8/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.3 |
| Price target | 9.5 |
| erm sentiment | 6.5 |
- ▸Analyst upside: 51%
Insider
3.8/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.7 |
| holder change | 4.2 |
- ▸Modest insider selling — $5,420,379 (0.052% of mkt cap)
Peer rank
3.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.8 |
| quality rank | 4.9 |
| growth rank | 1.0 |
Technical
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 9.0 |
| support resistance | 9.2 |
| 52w position | 3.2 |
Risk (lower is worse)
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.1 |
| days to cover | 8.4 |
| volatility | 3.3 |
| put call | 8.7 |
| implied vol | 5.1 |
| max pain risk | 3.0 |
| beta | 6.3 |
| debt equity | 7.7 |
- ▸Above max pain $30
- ▸Concentration risks: 2 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
7.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 6.5 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 7.8 |
| dividend safety | 6.8 |
- ▸Perfect beat streak: 4Q
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 (6)
- ASYMMETRY:4.8>=1.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:98d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- MOMENTUM:1.7<4.5
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
4.84
Upside
+35.6%
Downside
7.4%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 3.6 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 8.9) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:1.7<4.5) reinforce the read. Current asymmetry R:R is 4.84 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 8.9, Sentiment at 7.8, and Catalyst at 7.2; the weakest are Momentum at 1.7, Insider at 3.8, and Peer rank at 3.9. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of 4.84 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Cheap Valuation Large Upside
Trip ifAnalyst target falls below $58, more than 18% under the current $71.16.
- P2Excellent Cash Conversion
Trip ifFCF to net income conversion falls below 100% from current 209%.
- P3Customer Geographic Concentration
Trip ifTop ten customers share exceeds 80% from current 71.0%.
- P4Oversold Downtrend
Trip ifPrice drops to $49.28 or lower, the stop level, more than 4% below the current $51.63.
- P5Insider Selling And Declining Revenue
Trip ifRevenue growth falls below -8% YoY.