Gentherm (NASDAQ: THRM) and BorgWarner (NYSE:BWA) are both auto/tires/trucks companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitabiliy, dividends, risk, earnings, analyst recommendations, valuation and institutional ownership.

Analyst Recommendations

This is a breakdown of recent recommendations for Gentherm and BorgWarner, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gentherm 0 4 5 0 2.56
BorgWarner 3 10 4 0 2.06

Gentherm currently has a consensus price target of $42.14, suggesting a potential upside of 6.15%. BorgWarner has a consensus price target of $40.67, suggesting a potential downside of 9.47%. Given Gentherm’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Gentherm is more favorable than BorgWarner.

Volatility and Risk

Gentherm has a beta of 1.96, meaning that its stock price is 96% more volatile than the S&P 500. Comparatively, BorgWarner has a beta of 1.72, meaning that its stock price is 72% more volatile than the S&P 500.

Profitability

This table compares Gentherm and BorgWarner’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gentherm 9.47% 19.53% 10.88%
BorgWarner 1.56% 20.10% 8.02%

Dividends

BorgWarner pays an annual dividend of $0.56 per share and has a dividend yield of 1.2%. Gentherm does not pay a dividend. BorgWarner pays out 86.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Gentherm has raised its dividend for 2 consecutive years.

Earnings and Valuation

This table compares Gentherm and BorgWarner’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Gentherm $951.15 million 1.53 $157.55 million $2.45 16.20
BorgWarner $9.21 billion 1.04 $1.54 billion $0.65 69.11

BorgWarner has higher revenue and earnings than Gentherm. Gentherm is trading at a lower price-to-earnings ratio than BorgWarner, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

98.4% of Gentherm shares are owned by institutional investors. Comparatively, 92.0% of BorgWarner shares are owned by institutional investors. 2.3% of Gentherm shares are owned by insiders. Comparatively, 0.7% of BorgWarner shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Gentherm beats BorgWarner on 13 of the 17 factors compared between the two stocks.

About Gentherm

Gentherm Incorporated (Gentherm) is a global technology company engaged in the design, development, and manufacturing of thermal management technologies. The Company has two segments: Automotive and Industrial. Its products provide solutions for automotive passenger comfort and convenience, battery thermal management, remote power generation, patient temperature management, environmental product testing and other consumer and industrial temperature control needs. Its automotive products can be found on the vehicles of all major automotive manufacturers operating in North America, Europe and Asia. The Automotive segment comprises the results from its global automotive businesses and individual convenience products. The Industrial segment represents the combined results from its remote power generation systems business, patient temperature management systems business, environmental testing equipment and services business, and advanced research and product development division.

About BorgWarner

BorgWarner Inc. is engaged in providing technology solutions for combustion, hybrid and electric vehicles. The Company’s segments include Engine and Drivetrain. The Engine segment’s products include turbochargers, timing devices and chains, emissions systems and thermal systems. The Engine segment develops and manufactures products for gasoline and diesel engines, and alternative powertrains. The Drivetrain segment’s products include transmission components and systems, all-wheel drive (AWD) torque transfer systems and rotating electrical devices. The Company’s products are manufactured and sold across the world, primarily to original equipment manufacturers (OEMs) of light vehicles (passenger cars, sport-utility vehicles (SUVs), vans and light trucks). The Company’s products are also sold to other OEMs of commercial vehicles (medium-duty trucks, heavy-duty trucks and buses) and off-highway vehicles (agricultural and construction machinery and marine applications.

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