Shares of BorgWarner Inc. (BWA) inched up 0.6% on Jan 14 after it announced mixed guidance for 2014 and 2015. For 2014, the company reduced its organic sales growth guidance to 11.5% from the previous projection of 12%–13%. The downward revision is to be blamed on weaker foreign currencies and lower-than-expected volumes, though marginal.
Further, BorgWarner affirmed its net earnings guidance (excluding non-comparable items) for 2014 in the band of $3.23–$3.28 per share, up from $2.89 in 2013. Operating margin for 2014 is expected to be up 13% over 2013.
Net sales growth for 2015 is projected to be in the range of 2%–6%, driven by the demand for BorgWarner’s product technologies, which enhance fuel economy, emissions and performance. Excluding the impact of weak foreign currency, net sales for 2015 are forecasted to grow 9.5%–12%.
Net earnings for 2015 are expected to rise to $3.35–$3.55 per share. Also, net earnings (excluding the impact of weak currencies) are predicted to be in the band of $3.60–$3.75 per share, a rise of 11% to 14% compared with its 2014 net earnings guidance, excluding non-recurring items.
Operating income, as a percentage of net sales, is expected to be more than 13% in 2015, higher than its guidance of nearly 13% for 2014 due to higher net sales and cost management efforts. Effective tax rate of BorgWarner should be about 29% this year. Further, the company expects free cash flow of $350–$400 million in 2015.
BorgWarner currently carries a Zacks Rank #3 (Hold). Investors interested in the auto industry could consider better-ranked stocks like Advance Auto Parts Inc. (AAP), O'Reilly Automotive Inc. (ORLY) and Douglas Dynamics, Inc. (PLOW), all sporting a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment