Analyzing Visteon (VC) & BorgWarner (BWA)

Visteon (NYSE: VC) and BorgWarner (NYSE:BWA) are both mid-cap auto/tires/trucks companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, risk, dividends, valuation, earnings, analyst recommendations and profitability.

Institutional and Insider Ownership

95.2% of BorgWarner shares are held by institutional investors. 0.2% of Visteon shares are held by company insiders. Comparatively, 0.7% of BorgWarner shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Visteon and BorgWarner’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Visteon $3.16 billion 1.23 $75.00 million $4.73 26.51
BorgWarner $9.07 billion 1.20 $118.50 million $1.38 37.47

BorgWarner has higher revenue and earnings than Visteon. Visteon is trading at a lower price-to-earnings ratio than BorgWarner, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations for Visteon and BorgWarner, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Visteon 0 5 9 0 2.64
BorgWarner 2 8 5 0 2.20

Visteon presently has a consensus target price of $123.33, suggesting a potential downside of 1.64%. BorgWarner has a consensus target price of $50.07, suggesting a potential downside of 3.18%. Given Visteon’s stronger consensus rating and higher probable upside, equities analysts clearly believe Visteon is more favorable than BorgWarner.

Dividends

BorgWarner pays an annual dividend of $0.68 per share and has a dividend yield of 1.3%. Visteon does not pay a dividend. BorgWarner pays out 49.3% of its earnings in the form of a dividend. Visteon has raised its dividend for 2 consecutive years.

Profitability

This table compares Visteon and BorgWarner’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Visteon 4.83% 29.13% 9.06%
BorgWarner 3.09% 21.48% 8.35%

Risk & Volatility

Visteon has a beta of 0.85, meaning that its share price is 15% less volatile than the S&P 500. Comparatively, BorgWarner has a beta of 1.75, meaning that its share price is 75% more volatile than the S&P 500.

Summary

Visteon beats BorgWarner on 10 of the 17 factors compared between the two stocks.

Visteon Company Profile

Visteon Corporation is a global automotive supplier that designs, engineers and manufactures electronics products for original equipment vehicle manufacturer (OEM), including Ford, Mazda, Nissan/Renault, General Motors, Honda BMW and Daimler. The Company operates through Electronics segment. The Electronics segment provides vehicle cockpit electronics products to customers, including instrument clusters, information displays, infotainment, audio systems, telematics solutions and head up displays. It designs and manufacturers vehicle cockpit electronics components, modules and systems. It offers a range of information displays incorporating a sleek profile, craftsmanship and touch sensors, designed to deliver high performance for the automotive market. It offers a range of audio products, including audio head units, and analog and digital radios, which deliver consumer device connectivity. It offers an automotive-grade, integrated domain controller approach, called Smartcore.

BorgWarner Company Profile

BorgWarner Inc. is engaged in providing technology solutions for combustion, hybrid and electric vehicles. The Company’s segments include Engine and Drivetrain. The Engine segment’s products include turbochargers, timing devices and chains, emissions systems and thermal systems. The Engine segment develops and manufactures products for gasoline and diesel engines, and alternative powertrains. The Drivetrain segment’s products include transmission components and systems, all-wheel drive (AWD) torque transfer systems and rotating electrical devices. The Company’s products are manufactured and sold across the world, primarily to original equipment manufacturers (OEMs) of light vehicles (passenger cars, sport-utility vehicles (SUVs), vans and light trucks). The Company’s products are also sold to other OEMs of commercial vehicles (medium-duty trucks, heavy-duty trucks and buses) and off-highway vehicles (agricultural and construction machinery and marine applications.

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