BorgWarner Earnings: Beat Well Received After Tricky 2023

Narrow-moat BorgWarner reported first-quarter 2024 EPS before special items of $1.03, $0.16 ahead of the $0.87 FactSet consensus and $0.22 ahead of the prior year. Revenue grew organically by 7% to $3.6 billion, also beating expectations. Adjusted EBIT margin came in at 9.4% versus 9% a year prior. Management raised the floor on its guidance for 2024 organic growth from 1%-5% to 2%-5%, while also raising adjusted diluted EPS for the year from $3.65-$4.00 to $3.80-$4.15. Unchanged were management expectations for the year regarding eProduct sales and free cash flow. Management also announced an additional $500 million share buyback authorization over the next three years. These are broadly positive results that have mollified investors, with shares up over 8% in early trading. Regardless, we make no changes to our forecasts and maintain a fair value estimate of $42 per share.