BorgWarner Board Member Makes $165K Stock Purchase

Sailaja Shankar, Board Member at BorgWarner BWA, reported an insider buy on May 2, according to a new SEC filing.

What Happened: Shankar's recent purchase of 5,814 shares of BorgWarner, disclosed in a Form 4 filing with the U.S. Securities and Exchange Commission on Friday, reflects confidence in the company's potential. The total transaction value is $165,001.

The latest market snapshot at Friday morning reveals BorgWarner shares up by 1.65%, trading at $29.01.

All You Need to Know About BorgWarner

BorgWarner is a tier one supplier of turbo and thermal management technologies, drivetrain systems, powerdrive systems, and battery and charging systems mostly to automotive original equipment manufacturers. Its products aim to move a vehicle with as few electrons as possible, resulting in cleaner, cost-optimized, and more-efficient vehicles. Foundational products, the combustion vehicle business, contributes more than 80% to group revenue while BorgWarner transitions to becoming an electric vehicle-centric parts supplier (e-business). In 2023, 25% of the company's revenue was sourced from Volkswagen and Ford. Revenue is well diversified geographically, with approximately a third each generated in North America, Europe, and Asia.

BorgWarner: Delving into Financials

Negative Revenue Trend: Examining BorgWarner's financials over 3 months reveals challenges. As of 31 December, 2024, the company experienced a decline of approximately -2.36% in revenue growth, reflecting a decrease in top-line earnings. As compared to competitors, the company encountered difficulties, with a growth rate lower than the average among peers in the Consumer Discretionary sector.

Evaluating Earnings Performance:

• Gross Margin: The company issues a cost efficiency warning with a low gross margin of 19.86%, indicating potential difficulties in maintaining profitability compared to its peers.

• Earnings per Share (EPS): BorgWarner's EPS is below the industry average, signaling challenges in bottom-line performance with a current EPS of -1.852107.

Debt Management: BorgWarner's debt-to-equity ratio is below the industry average at 0.79, reflecting a lower dependency on debt financing and a more conservative financial approach.

Valuation Metrics: A Closer Look

• Price to Earnings (P/E) Ratio: The current P/E ratio of 17.51 is below industry norms, indicating potential undervaluation and presenting an investment opportunity.

• Price to Sales (P/S) Ratio: The Price to Sales ratio is 0.46, which is lower than the industry average. This suggests a possible undervaluation based on sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): BorgWarner's EV/EBITDA ratio, lower than industry averages at 6.57, indicates attractively priced shares.

Market Capitalization: Boasting an elevated market capitalization, the company surpasses industry averages. This signals substantial size and strong market recognition.

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Uncovering the Importance of Insider Activity

Insider transactions shouldn't be used primarily to make an investing decision, however an insider transaction can be an important factor in the investing decision.

From a legal standpoint, the term "insider" pertains to any officer, director, or beneficial owner holding more than ten percent of a company's equity securities as outlined in Section 12 of the Securities Exchange Act of 1934. This encompasses executives in the c-suite and significant hedge funds. These insiders are mandated to inform the public of their transactions through a Form 4 filing, to be submitted within two business days of the transaction.

A company insider's new purchase is a indicator of their positive anticipation for a rise in the stock.

While insider sells may not necessarily reflect a bearish view and can be motivated by various factors.

The Insider's Guide to Important Transaction Codes

For investors, a primary focus lies on transactions occurring in the open market, as indicated in Table I of the Form 4 filing. A P in Box 3 denotes a purchase, while S signifies a sale. Transaction code C signals the conversion of an option, and transaction code A denotes a grant, award, or other acquisition of securities from the company.

Check Out The Full List Of BorgWarner's Insider Trades.

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This article was generated by Benzinga's automated content engine and reviewed by an editor.