Intrinsic value of BorgWarner - BWA

Previous Close

$45.36

  Intrinsic Value

$66.58

stock screener

  Rating & Target

buy

+47%

  Value-price divergence*

+32%

Previous close

$45.36

 
Intrinsic value

$66.58

 
Up/down potential

+47%

 
Rating

buy

 
Value-price divergence*

+32%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of BWA stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 9.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  13.06
  6.10
  5.99
  5.89
  5.80
  5.72
  5.65
  5.58
  5.53
  5.47
  5.43
  5.38
  5.35
  5.31
  5.28
  5.25
  5.23
  5.20
  5.18
  5.17
  5.15
  5.13
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
Revenue, $m
  9,071
  9,624
  10,201
  10,802
  11,428
  12,082
  12,765
  13,478
  14,223
  15,001
  15,815
  16,667
  17,557
  18,490
  19,466
  20,488
  21,559
  22,681
  23,857
  25,089
  26,381
  27,735
  29,155
  30,644
  32,206
  33,845
  35,564
  37,367
  39,260
  41,245
  43,329
Variable operating expenses, $m
 
  8,488
  8,986
  9,505
  10,047
  10,612
  11,202
  11,818
  12,462
  13,135
  13,838
  14,404
  15,174
  15,980
  16,823
  17,707
  18,632
  19,602
  20,618
  21,683
  22,799
  23,970
  25,197
  26,484
  27,834
  29,250
  30,736
  32,294
  33,930
  35,646
  37,446
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  8,845
  8,488
  8,986
  9,505
  10,047
  10,612
  11,202
  11,818
  12,462
  13,135
  13,838
  14,404
  15,174
  15,980
  16,823
  17,707
  18,632
  19,602
  20,618
  21,683
  22,799
  23,970
  25,197
  26,484
  27,834
  29,250
  30,736
  32,294
  33,930
  35,646
  37,446
Operating income, $m
  226
  1,136
  1,215
  1,296
  1,381
  1,470
  1,563
  1,660
  1,761
  1,866
  1,977
  2,263
  2,384
  2,510
  2,643
  2,782
  2,927
  3,079
  3,239
  3,406
  3,582
  3,765
  3,958
  4,160
  4,372
  4,595
  4,828
  5,073
  5,330
  5,600
  5,882
EBITDA, $m
  617
  1,563
  1,657
  1,755
  1,856
  1,963
  2,073
  2,189
  2,310
  2,437
  2,569
  2,707
  2,852
  3,003
  3,162
  3,328
  3,502
  3,684
  3,875
  4,075
  4,285
  4,505
  4,736
  4,978
  5,231
  5,497
  5,777
  6,070
  6,377
  6,699
  7,038
Interest expense (income), $m
  100
  86
  100
  114
  129
  145
  162
  179
  197
  215
  235
  255
  277
  299
  323
  347
  373
  400
  428
  458
  489
  522
  556
  591
  629
  668
  709
  753
  798
  846
  896
Earnings before tax, $m
  191
  1,051
  1,115
  1,182
  1,252
  1,325
  1,401
  1,481
  1,564
  1,651
  1,742
  2,007
  2,107
  2,211
  2,320
  2,434
  2,554
  2,679
  2,810
  2,948
  3,093
  3,244
  3,403
  3,569
  3,744
  3,927
  4,119
  4,320
  4,532
  4,754
  4,987
Tax expense, $m
  31
  284
  301
  319
  338
  358
  378
  400
  422
  446
  470
  542
  569
  597
  626
  657
  690
  723
  759
  796
  835
  876
  919
  964
  1,011
  1,060
  1,112
  1,167
  1,224
  1,284
  1,346
Net income, $m
  119
  767
  814
  863
  914
  967
  1,023
  1,081
  1,142
  1,205
  1,272
  1,465
  1,538
  1,614
  1,694
  1,777
  1,864
  1,956
  2,052
  2,152
  2,258
  2,368
  2,484
  2,605
  2,733
  2,867
  3,007
  3,154
  3,308
  3,470
  3,640

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  444
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  8,835
  8,903
  9,436
  9,992
  10,572
  11,177
  11,808
  12,468
  13,157
  13,877
  14,630
  15,418
  16,242
  17,104
  18,007
  18,953
  19,944
  20,981
  22,069
  23,209
  24,404
  25,657
  26,970
  28,348
  29,793
  31,309
  32,899
  34,568
  36,318
  38,155
  40,082
Adjusted assets (=assets-cash), $m
  8,391
  8,903
  9,436
  9,992
  10,572
  11,177
  11,808
  12,468
  13,157
  13,877
  14,630
  15,418
  16,242
  17,104
  18,007
  18,953
  19,944
  20,981
  22,069
  23,209
  24,404
  25,657
  26,970
  28,348
  29,793
  31,309
  32,899
  34,568
  36,318
  38,155
  40,082
Revenue / Adjusted assets
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
  1.081
Average production assets, $m
  2,828
  3,003
  3,183
  3,370
  3,566
  3,770
  3,983
  4,205
  4,437
  4,680
  4,934
  5,200
  5,478
  5,769
  6,073
  6,392
  6,726
  7,076
  7,443
  7,828
  8,231
  8,653
  9,096
  9,561
  10,048
  10,560
  11,096
  11,659
  12,249
  12,869
  13,519
Working capital, $m
  820
  587
  622
  659
  697
  737
  779
  822
  868
  915
  965
  1,017
  1,071
  1,128
  1,187
  1,250
  1,315
  1,384
  1,455
  1,530
  1,609
  1,692
  1,778
  1,869
  1,965
  2,065
  2,169
  2,279
  2,395
  2,516
  2,643
Total debt, $m
  2,220
  2,372
  2,718
  3,078
  3,454
  3,846
  4,255
  4,682
  5,129
  5,595
  6,083
  6,594
  7,128
  7,687
  8,272
  8,885
  9,526
  10,199
  10,904
  11,642
  12,417
  13,229
  14,080
  14,973
  15,909
  16,891
  17,922
  19,003
  20,137
  21,327
  22,576
Total liabilities, $m
  5,616
  5,769
  6,115
  6,475
  6,851
  7,243
  7,652
  8,079
  8,526
  8,992
  9,480
  9,991
  10,525
  11,084
  11,669
  12,282
  12,923
  13,596
  14,301
  15,039
  15,814
  16,626
  17,477
  18,370
  19,306
  20,288
  21,319
  22,400
  23,534
  24,724
  25,973
Total equity, $m
  3,218
  3,134
  3,322
  3,517
  3,721
  3,934
  4,157
  4,389
  4,631
  4,885
  5,150
  5,427
  5,717
  6,021
  6,339
  6,671
  7,020
  7,385
  7,768
  8,170
  8,590
  9,031
  9,494
  9,979
  10,487
  11,021
  11,581
  12,168
  12,784
  13,430
  14,109
Total liabilities and equity, $m
  8,834
  8,903
  9,437
  9,992
  10,572
  11,177
  11,809
  12,468
  13,157
  13,877
  14,630
  15,418
  16,242
  17,105
  18,008
  18,953
  19,943
  20,981
  22,069
  23,209
  24,404
  25,657
  26,971
  28,349
  29,793
  31,309
  32,900
  34,568
  36,318
  38,154
  40,082
Debt-to-equity ratio
  0.690
  0.760
  0.820
  0.880
  0.930
  0.980
  1.020
  1.070
  1.110
  1.150
  1.180
  1.210
  1.250
  1.280
  1.300
  1.330
  1.360
  1.380
  1.400
  1.430
  1.450
  1.460
  1.480
  1.500
  1.520
  1.530
  1.550
  1.560
  1.580
  1.590
  1.600
Adjusted equity ratio
  0.349
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352
  0.352

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  119
  767
  814
  863
  914
  967
  1,023
  1,081
  1,142
  1,205
  1,272
  1,465
  1,538
  1,614
  1,694
  1,777
  1,864
  1,956
  2,052
  2,152
  2,258
  2,368
  2,484
  2,605
  2,733
  2,867
  3,007
  3,154
  3,308
  3,470
  3,640
Depreciation, amort., depletion, $m
  391
  427
  442
  458
  475
  492
  511
  530
  549
  570
  592
  444
  468
  493
  519
  546
  575
  605
  636
  669
  703
  740
  777
  817
  859
  903
  948
  996
  1,047
  1,100
  1,155
Funds from operations, $m
  920
  1,194
  1,256
  1,321
  1,389
  1,460
  1,534
  1,611
  1,691
  1,775
  1,864
  1,910
  2,006
  2,107
  2,213
  2,323
  2,439
  2,561
  2,688
  2,821
  2,961
  3,108
  3,261
  3,423
  3,592
  3,769
  3,955
  4,150
  4,355
  4,570
  4,796
Change in working capital, $m
  -116
  34
  35
  37
  38
  40
  42
  43
  45
  47
  50
  52
  54
  57
  60
  62
  65
  68
  72
  75
  79
  83
  87
  91
  95
  100
  105
  110
  115
  121
  127
Cash from operations, $m
  1,036
  1,160
  1,221
  1,285
  1,351
  1,420
  1,492
  1,567
  1,646
  1,728
  1,814
  1,858
  1,952
  2,050
  2,153
  2,261
  2,374
  2,492
  2,616
  2,746
  2,882
  3,025
  3,175
  3,332
  3,496
  3,669
  3,850
  4,040
  4,240
  4,449
  4,669
Maintenance CAPEX, $m
  0
  -242
  -257
  -272
  -288
  -305
  -322
  -340
  -359
  -379
  -400
  -422
  -444
  -468
  -493
  -519
  -546
  -575
  -605
  -636
  -669
  -703
  -740
  -777
  -817
  -859
  -903
  -948
  -996
  -1,047
  -1,100
New CAPEX, $m
  -501
  -175
  -180
  -187
  -196
  -204
  -213
  -222
  -232
  -243
  -254
  -266
  -278
  -291
  -305
  -319
  -334
  -350
  -367
  -384
  -403
  -423
  -443
  -465
  -487
  -511
  -536
  -563
  -590
  -620
  -650
Cash from investing activities, $m
  -404
  -417
  -437
  -459
  -484
  -509
  -535
  -562
  -591
  -622
  -654
  -688
  -722
  -759
  -798
  -838
  -880
  -925
  -972
  -1,020
  -1,072
  -1,126
  -1,183
  -1,242
  -1,304
  -1,370
  -1,439
  -1,511
  -1,586
  -1,667
  -1,750
Free cash flow, $m
  632
  744
  785
  825
  867
  911
  957
  1,004
  1,054
  1,106
  1,160
  1,170
  1,229
  1,291
  1,355
  1,423
  1,493
  1,567
  1,644
  1,725
  1,810
  1,899
  1,992
  2,090
  2,192
  2,299
  2,411
  2,529
  2,653
  2,783
  2,919
Issuance/(repayment) of debt, $m
  -318
  328
  346
  360
  376
  392
  409
  427
  446
  467
  488
  510
  534
  559
  585
  613
  642
  673
  705
  739
  774
  812
  851
  893
  936
  982
  1,030
  1,081
  1,134
  1,190
  1,249
Issuance/(repurchase) of shares, $m
  -288
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -621
  328
  346
  360
  376
  392
  409
  427
  446
  467
  488
  510
  534
  559
  585
  613
  642
  673
  705
  739
  774
  812
  851
  893
  936
  982
  1,030
  1,081
  1,134
  1,190
  1,249
Total cash flow (excl. dividends), $m
  -21
  1,072
  1,130
  1,185
  1,243
  1,303
  1,366
  1,432
  1,500
  1,572
  1,648
  1,681
  1,763
  1,850
  1,941
  2,036
  2,135
  2,240
  2,349
  2,464
  2,584
  2,711
  2,843
  2,982
  3,128
  3,281
  3,442
  3,610
  3,787
  3,973
  4,168
Retained Cash Flow (-), $m
  336
  -184
  -188
  -196
  -204
  -213
  -222
  -232
  -243
  -253
  -265
  -277
  -290
  -304
  -318
  -333
  -349
  -365
  -383
  -401
  -421
  -441
  -462
  -485
  -509
  -534
  -560
  -587
  -616
  -647
  -678
Prev. year cash balance distribution, $m
 
  268
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,156
  942
  990
  1,039
  1,090
  1,144
  1,200
  1,258
  1,319
  1,383
  1,404
  1,473
  1,546
  1,623
  1,703
  1,787
  1,874
  1,966
  2,063
  2,164
  2,270
  2,381
  2,497
  2,620
  2,748
  2,882
  3,023
  3,171
  3,326
  3,489
Discount rate, %
 
  4.40
  4.62
  4.85
  5.09
  5.35
  5.62
  5.90
  6.19
  6.50
  6.83
  7.17
  7.53
  7.90
  8.30
  8.71
  9.15
  9.60
  10.08
  10.59
  11.12
  11.67
  12.26
  12.87
  13.51
  14.19
  14.90
  15.64
  16.43
  17.25
  18.11
PV of cash for distribution, $m
 
  1,107
  861
  858
  852
  840
  824
  803
  778
  748
  714
  655
  617
  575
  532
  486
  440
  394
  349
  305
  263
  223
  187
  154
  125
  100
  78
  60
  45
  33
  24
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

BorgWarner Inc. provides solutions for combustion, hybrid, and electric vehicles worldwide. The company operates through two segments, Engine and Drivetrain. The Engine segment develops and manufactures turbochargers; and timing systems, such as timing chains, variable cam timing products, crankshaft and camshaft sprockets, tensioners, guides and snubbers, HY-VO front-wheel drive transmission chains, and four-wheel drive chains for light vehicles. It also provides emissions systems, including electric air pumps and exhaust gas recirculation (EGR) modules, EGR coolers, EGR tubes, and EGR valves; thermal systems products comprising viscous fan drives, polymer fans, and coolant pumps; and glow plugs, diesel cold start systems, and other gasoline ignition technologies. The Drivetrain segment develops and manufactures friction and mechanical products, including dual and friction clutch modules, friction and steel plates, transmission bands, torque converter clutches, one-way clutches, and torsional vibration dampers. This segment also offers control products comprising electro-hydraulic solenoids, transmission solenoid modules, and dual clutch control modules; torque management products, such as rear-wheel drive/all-wheel drive (AWD) transfer case systems, front wheel drive-AWD coupling systems, and cross-axle coupling systems; and starter motors, alternators, and hybrid electric motors. The company sells its products to original equipment manufacturers of light vehicles consisting of passenger cars, sport-utility vehicles, vans, and light trucks; commercial vehicles, such as medium-duty and heavy duty trucks, and buses; and off-highway vehicles, including agricultural and construction machinery, and marine applications, as well as to tier one vehicle systems suppliers and the aftermarket for light, commercial, and off-highway vehicles. BorgWarner Inc. was founded in 1987 and is headquartered in Auburn Hills, Michigan.

FINANCIAL RATIOS  of  BorgWarner (BWA)

Valuation Ratios
P/E Ratio 80.9
Price to Sales 1.1
Price to Book 3
Price to Tangible Book
Price to Cash Flow 9.3
Price to Free Cash Flow 18
Growth Rates
Sales Growth Rate 13.1%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -13.2%
Cap. Spend. - 3 Yr. Gr. Rate 3.7%
Financial Strength
Quick Ratio 3
Current Ratio 0
LT Debt to Equity 63.5%
Total Debt to Equity 69%
Interest Coverage 3
Management Effectiveness
Return On Assets 2.3%
Ret/ On Assets - 3 Yr. Avg. 6.8%
Return On Total Capital 2.1%
Ret/ On T. Cap. - 3 Yr. Avg. 8.9%
Return On Equity 3.5%
Return On Equity - 3 Yr. Avg. 12.9%
Asset Turnover 1
Profitability Ratios
Gross Margin 21.3%
Gross Margin - 3 Yr. Avg. 21.2%
EBITDA Margin 7.5%
EBITDA Margin - 3 Yr. Avg. 13.4%
Operating Margin 2.5%
Oper. Margin - 3 Yr. Avg. 8.6%
Pre-Tax Margin 2.1%
Pre-Tax Margin - 3 Yr. Avg. 8.5%
Net Profit Margin 1.3%
Net Profit Margin - 3 Yr. Avg. 5.6%
Effective Tax Rate 16.2%
Eff/ Tax Rate - 3 Yr. Avg. 25.4%
Payout Ratio 95%

BWA stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the BWA stock intrinsic value calculation we used $9071 million for the last fiscal year's total revenue generated by BorgWarner. The default revenue input number comes from 2016 income statement of BorgWarner. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our BWA stock valuation model: a) initial revenue growth rate of 6.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.4%, whose default value for BWA is calculated based on our internal credit rating of BorgWarner, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of BorgWarner.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of BWA stock the variable cost ratio is equal to 88.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for BWA stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.2% for BorgWarner.

Corporate tax rate of 27% is the nominal tax rate for BorgWarner. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the BWA stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for BWA are equal to 31.2%.

Life of production assets of 11.7 years is the average useful life of capital assets used in BorgWarner operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for BWA is equal to 6.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $3218 million for BorgWarner - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 211.445 million for BorgWarner is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of BorgWarner at the current share price and the inputted number of shares is $9.6 billion.

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COMPANY NEWS

▶ ETFs with exposure to BorgWarner, Inc. : August 11, 2017   [Aug-11-17 05:03PM  Capital Cube]
▶ BorgWarner CEO Says U.S. Auto Market Has Hit a Plateau   [Aug-07-17 04:20PM  Bloomberg Video]
▶ BorgWarner to Webcast 2017 Investor Day   [06:30AM  PR Newswire]
▶ BorgWarner Manages Market Shifts   [Jul-29-17 01:07PM  Motley Fool]
▶ BorgWarner beats Street 2Q forecasts   [01:24AM  Associated Press]
▶ BorgWarner Declares Quarterly Dividend   [06:31AM  PR Newswire]
▶ 4 Auto Stocks On Track to Beat in Q2   [Jul-21-17 01:08PM  Zacks]
▶ [$$] BorgWarner, Up 30%, Can Accelerate   [Jul-08-17 12:57AM  Barrons.com]
▶ BorgWarner to Host Investor Day on Aug. 7   [Jun-05-17 06:30AM  PR Newswire]
▶ The Hot Stock: BorgWarner Gains 3.3%   [May-30-17 04:16PM  Barrons.com]
▶ These 3 Stocks Look Expensive but Are Actually Cheap   [May-11-17 10:43AM  Motley Fool]
▶ BorgWarner Reports a Strong First Quarter   [May-10-17 10:45AM  Motley Fool]
▶ 5 Auto Stocks That Are Buys Post-Earnings   [May-09-17 09:20AM  Zacks]
▶ Autos: Is It Really That Bad?   [May-03-17 02:09PM  Barrons.com]
▶ ETFs with exposure to BorgWarner, Inc. : May 1, 2017   [May-01-17 03:43PM  Capital Cube]
▶ BorgWarner beats Street 1Q forecasts   [06:38AM  Associated Press]
▶ BorgWarner Declares Quarterly Dividend   [06:30AM  PR Newswire]
▶ BorgWarner Invests $10M in Autotech Ventures   [Apr-05-17 12:54PM  Bloomberg]
▶ [$$] BorgWarner Invests $10 Million in a Silicon Valley Venture Fund   [Apr-03-17 03:06PM  The Wall Street Journal]
▶ Auto Stocks Hit Hard by Weak March Sales   [01:31PM  The Wall Street Journal]
▶ Auto Stocks Hit Hard by Weak March Sales   [01:31PM  at The Wall Street Journal]
Stock chart of BWA Financial statements of BWA
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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