Motorcar Parts of America (NASDAQ: MPAA) and BorgWarner (NYSE:BWA) are both auto/tires/trucks companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, profitability, institutional ownership, valuation, dividends, analyst recommendations and risk.

Institutional and Insider Ownership

91.1% of BorgWarner shares are owned by institutional investors. 4.4% of Motorcar Parts of America shares are owned by company insiders. Comparatively, 0.7% of BorgWarner shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Motorcar Parts of America and BorgWarner’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Motorcar Parts of America $430.90 million 1.15 $77.71 million $1.93 13.78
BorgWarner $9.27 billion 1.08 $1.54 billion $0.89 53.43

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

Profitability

This table compares Motorcar Parts of America and BorgWarner’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Motorcar Parts of America 8.75% 16.77% 9.31%
BorgWarner 2.06% 20.75% 8.17%

Volatility and Risk

Motorcar Parts of America has a beta of 0.95, suggesting that its stock price is 5% less volatile than the S&P 500. Comparatively, BorgWarner has a beta of 1.73, suggesting that its stock price is 73% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for Motorcar Parts of America and BorgWarner, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Motorcar Parts of America 0 0 3 0 3.00
BorgWarner 3 8 4 0 2.07

Motorcar Parts of America currently has a consensus target price of $36.67, indicating a potential upside of 37.84%. BorgWarner has a consensus target price of $43.36, indicating a potential downside of 8.82%. Given Motorcar Parts of America’s stronger consensus rating and higher probable upside, analysts plainly believe Motorcar Parts of America is more favorable than BorgWarner.

Dividends

BorgWarner pays an annual dividend of $0.56 per share and has a dividend yield of 1.2%. Motorcar Parts of America does not pay a dividend. BorgWarner pays out 62.9% of its earnings in the form of a dividend. BorgWarner has increased its dividend for 2 consecutive years.

Summary

BorgWarner beats Motorcar Parts of America on 9 of the 17 factors compared between the two stocks.

Motorcar Parts of America Company Profile

Motorcar Parts of America, Inc. is a manufacturer, remanufacturer and distributor of automotive aftermarket parts, including alternators, starters, wheel hub assembly, brake master cylinders, brake power boosters and turbochargers utilized in imported and domestic passenger vehicles, light trucks and heavy-duty applications. The Company sells its products in North America to auto parts retail and traditional warehouse chains and to automobile manufacturers for both their aftermarket programs and their warranty replacement programs (OES). It recycles materials, including metal from the used cores and corrugated packaging. The Company carries over 13,000 stock keeping units (SKUs) for automotive parts that are sold under its customers’ recognized private label brand names and its Quality-Built, Pure Energy, Xtreme, Reliance and other brand names. It sells its products to automotive retail outlets and the professional repair market throughout the United States and Canada.

BorgWarner Company Profile

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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