Since the beginning of the worldwide recession in 2007, new car and truck sales have slowed. Companies that supplied parts to the new car makers were also casualties of the recession and suffered through significant earnings reductions. In 2011, the economy began to improve and new car sales began to increase. This article will examine five auto parts makers to see if any of them could be set for a breakout.
Borg Warner (BWA) Borg Warner has a market cap of $7.06 billion with a price to earnings ratio of 14.88. The stock has traded in a 52 week range between $54.59 and $77.70. The stock is currently trading around $64. The company reported third quarter revenues of $1.8 billion compared to revenues of $1.4 billion in the third quarter of 2010. Third quarter net income was $141 million compared to net income of $106 million in the third quarter of 2010.
One of Borg Warner’s competitors is Genuine Parts Company (GPC). Genuine Parts is currently trading around $62 with a market cap of $9.66 billion and a price to earnings ratio of 17.88. Genuine Parts does not pay a dividend versus Borg Warner whose dividend yields 2.9%.
Borg Warner manufactures automotive components, which it sales primarily to new car manufacturers. The company’s earnings have been in an uptrend. In 2010, the company increased year-over-year revenues by 43% and net income by 1,296%. In the third quarter, the company increased year-over-year revenues by 28% and net income by 32%. Despite the company’s impressive earnings growth, the stock price is down by 6% over the last 52 weeks and down by 13% over the last two months. To continue reading, click here.