Critical Analysis: BorgWarner (BWA) versus Stoneridge (SRI)
BorgWarner (NYSE: BWA) and Stoneridge (NYSE:SRI) are both auto/tires/trucks companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, risk, profitability, analyst recommendations and institutional ownership.
Volatility & Risk
BorgWarner has a beta of 1.73, meaning that its share price is 73% more volatile than the S&P 500. Comparatively, Stoneridge has a beta of 1.33, meaning that its share price is 33% more volatile than the S&P 500.
This table compares BorgWarner and Stoneridge’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Institutional and Insider Ownership
91.1% of BorgWarner shares are owned by institutional investors. Comparatively, 87.8% of Stoneridge shares are owned by institutional investors. 0.7% of BorgWarner shares are owned by insiders. Comparatively, 5.3% of Stoneridge shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Valuation and Earnings
This table compares BorgWarner and Stoneridge’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|BorgWarner||$9.27 billion||1.11||$1.54 billion||$0.89||54.79|
|Stoneridge||$759.88 million||0.67||$85.94 million||$2.70||6.67|
BorgWarner has higher revenue and earnings than Stoneridge. Stoneridge is trading at a lower price-to-earnings ratio than BorgWarner, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent ratings and recommmendations for BorgWarner and Stoneridge, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
BorgWarner currently has a consensus price target of $43.36, indicating a potential downside of 11.08%. Stoneridge has a consensus price target of $19.50, indicating a potential upside of 8.27%. Given Stoneridge’s stronger consensus rating and higher probable upside, analysts plainly believe Stoneridge is more favorable than BorgWarner.
BorgWarner pays an annual dividend of $0.56 per share and has a dividend yield of 1.1%. Stoneridge does not pay a dividend. BorgWarner pays out 62.9% of its earnings in the form of a dividend. Stoneridge has increased its dividend for 2 consecutive years.
Stoneridge beats BorgWarner on 9 of the 17 factors compared between the two stocks.
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.
Stoneridge Company Profile
Stoneridge, Inc. is a designer and manufacturer of engineered electrical and electronic components, modules and systems for the automotive, commercial, motorcycle, off-highway and agricultural vehicle markets. The Company operates through three segments: Control Devices, Electronics and PST. The Company’s Control Devices segment designs and manufactures products that monitor, measure or activate specific functions within a vehicle and includes product lines, such as sensors, switches, valves, and actuators. The Company’s Electronics segment designs and manufactures electronic instrument clusters, electronic control units and driver information systems. The PST segment is engaged in the design, manufacture and sale of in-vehicle audio and video devices, electronic vehicle security alarms, convenience accessories, vehicle tracking devices and monitoring services primarily for the automotive and motorcycle industry. It operated in 25 locations in 12 countries, as of December 31, 2016.
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