BorgWarner Hammered On Near-Term Pressures And Longer-Term Doubts

Although I did see some risk to BorgWarner (BWA) from "lower for longer" weakness in the global auto market, the 20% decline since my last update seems like a somewhat extreme reaction to what was already known to be a tough operating environment. On the other hand, this is another example of how the difference between longer-term DCF-based valuation and shorter-term earnings-based valuation approaches can toss stocks around, particularly in uncertain and fearful markets.

I don't see much that has changed in BorgWarner's long-term outlook, though I will once again repeat my concern/caveat about uncertainties on the margins for future hybrid/EV wins and the pace of new vehicle launches and adoption. Although I expect the second half of 2019 will be rough, and likely 2020 too, I still like the long-term story and BorgWarner's long-term opportunity in vehicle electrification, and I think this is a good time for more patient investors with a longer horizon to do their due diligence.

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BorgWarner Hammered On Near-Term Pressures And Longer-Term Doubts