Will BorgWarner (BWA) Q4 Earnings Surprise This Season? - Analyst Blog

BorgWarner Inc. ( BWA ) is set to report fourth-quarter 2014 results on Feb 12. In the last quarter, the company had posted in-line results. Let us see how things are shaping up for this announcement.

Factors Influencing this Quarter

For 2014, BorgWarner's organic sales are expected to increase 11.5%. Further, the company expects net earnings (excluding non-comparable items) for the year in the band of $3.23-$3.28 per share, up from $2.89 in 2013. Operating margin for 2014 is expected to be up 13% over 2013. These should translate into higher revenues and earnings in the fourth quarter as well.

However, BorgWarner faces stiff competition in the areas of technological innovation, application engineering development, quality, price, delivery and product launches. Moreover, BorgWarner's peers are developing innovative technologies, which could affect demand for the company's products. The company also faces intense pressure from original equipment manufacturers to reduce the prices of its products. This affects the company's profit margins.

Earnings Whispers

Our proven model does not conclusively show that BorgWarner is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: BorgWarner has an Earnings ESP of 0.00%. That is because the Most Accurate estimate and the Zacks Consensus Estimate both currently stand at 75 cents.

Zacks Rank: BorgWarner currently has a Zacks Rank #3 (Hold). Though a Zacks Rank #3 increases the predictive power of ESP, the company's ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Dana Holding Corporation ( DAN ) has an Earnings ESP of +4.26% and a Zacks Rank #3. The company will report its fourth-quarter 2014 results on Feb 19.

American Axle & Manufacturing Holdings Inc. ( AXL ) has an Earnings ESP of +1.85% and a Zacks Rank #2 (Buy). The company's fourth-quarter financial results are scheduled for release on Feb 23.

Magna International Inc. ( MGA ) has an Earnings ESP of +0.90% and a Zacks Rank #3. It will release its fourth-quarter earnings results on Feb 25.

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BORG WARNER INC (BWA): Free Stock Analysis Report

AMER AXLE & MFG (AXL): Free Stock Analysis Report

MAGNA INTL CL A (MGA): Free Stock Analysis Report

DANA HOLDING CP (DAN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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