BorgWarner Inc. Earnings Cheat Sheet: Five Straight Quarters of Double-Digit Growth

BorgWarner Inc. (NASDAQ:BWA) reported net income above Wall Street’s expectations for the third quarter. BorgWarner is a global supplier of engineered automotive systems and components, mainly for powertrain applications.

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BorgWarner Earnings Cheat Sheet for the Third Quarter

Results: Net income for BorgWarner Inc. rose to $141.6 million ($1.15 per share) vs. $106.7 million (87 cents per share) in the same quarter a year earlier. This marks a rise of 32.7% from the year earlier quarter.

Revenue: Rose 27% to $1.79 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: BWA beat the mean analyst estimate of $1.05 per share. Analysts were expecting revenue of $1.78 billion.

Quoting Management: “Our business continued to thrive in the third quarter,” said Timothy Manganello, Chairman and CEO of BorgWarner. “The industry’s steadfast focus on fuel economy and improved emissions continued to drive the adoption of BorgWarner technology around the world, and above-market growth for our company. Excluding the impact of currency and sales related to the acquisition of the Traction Systems division of Haldex, which closed in first quarter 2011, our sales were up approximately 16% in the third quarter, compared with 5% growth in global vehicle production. While growing our sales in the quarter, we also successfully managed costs, which resulted in a record quarterly operating income margin of 11.1%.”

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 30.9%, with the biggest boost coming in the third quarter of the last fiscal year when revenue rose 37.3% from the year earlier quarter.

Last quarter marked the fifth consecutive quarter of gross margins expanding as the company’s gross margin expanded 0.2 percentage point to 19.6% from the year earlier quarter. Over that span, margins have grown on average 1.7 percentage points per quarter on a year-over-year basis.

The company has now seen net income rise in three straight quarters. In the second quarter, net income rose 95.7% and in the first quarter, the figure rose 63.4%.

The company has now topped analyst estimates for the last four quarters. It beat the mark by 14 cents in the second quarter, by 4 cents in the first quarter, and by 6 cents in the fourth quarter of the last fiscal year.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the fourth quarter has moved down from $1.24 a share to $1.21 over the last thirty days. Over the past sixty days, the average estimate for the fiscal year has reached $4.39 abs per share, a decline from $4.42.

Competitors to Watch: Dana Holding Corporation (NYSE:DAN), Meritor Inc (MTOR), Cummins Inc. (NYSE:CMI), Quantum Fuel Systems Tech. (QTWWD), Enova Systems, Inc. (AMEX:ENA), Standard Motor Products, Inc. (NYSE:SMP), Federal-Mogul Corporation (NASDAQ:FDML), Westport Innovations Inc. (NASDAQ:WPRT), Lear Corporation (NYSE:LEA), and Tenneco Inc. (NYSE:TEN).

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(Source: Xignite Financials)