BorgWarner (NYSE: BWA) and Autoliv (NYSE:ALV) are both large-cap cyclical consumer goods & services companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, risk, earnings, institutional ownership, profitability, dividends and analyst recommendations.
Earnings & Valuation
This table compares BorgWarner and Autoliv’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|BorgWarner||$9.07 billion||1.32||$118.50 million||$1.38||41.26|
|Autoliv||$10.07 billion||1.18||$567.10 million||$5.80||23.52|
BorgWarner pays an annual dividend of $0.68 per share and has a dividend yield of 1.2%. Autoliv pays an annual dividend of $2.40 per share and has a dividend yield of 1.8%. BorgWarner pays out 49.3% of its earnings in the form of a dividend. Autoliv pays out 41.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. BorgWarner has increased its dividend for 3 consecutive years and Autoliv has increased its dividend for 8 consecutive years. Autoliv is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Institutional & Insider Ownership
95.2% of BorgWarner shares are held by institutional investors. Comparatively, 33.4% of Autoliv shares are held by institutional investors. 0.7% of BorgWarner shares are held by insiders. Comparatively, 0.3% of Autoliv shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
This table compares BorgWarner and Autoliv’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of recent ratings and target prices for BorgWarner and Autoliv, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
BorgWarner currently has a consensus target price of $51.21, indicating a potential downside of 10.06%. Autoliv has a consensus target price of $114.93, indicating a potential downside of 15.77%. Given BorgWarner’s stronger consensus rating and higher possible upside, equities research analysts clearly believe BorgWarner is more favorable than Autoliv.
Risk and Volatility
BorgWarner has a beta of 1.76, suggesting that its share price is 76% more volatile than the S&P 500. Comparatively, Autoliv has a beta of 1.11, suggesting that its share price is 11% more volatile than the S&P 500.
BorgWarner beats Autoliv on 9 of the 17 factors compared between the two stocks.
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.
Autoliv, Inc. is a supplier of automotive safety systems with a range of product offerings, including passive safety systems and active safety systems. The Company operates through two segments: Passive Safety and Electronics. The Passive safety products include modules and components for passenger and driver-side airbags, side-impact airbag protection systems, seatbelts, steering wheels, inflator technologies, whiplash protection systems and child seats, and components for such systems, as well as passive safety electronic products, such as restraint electronics and crash sensors. The Active safety products include camera-based vision systems, night driving assist, automotive radars, brake controls, positioning systems, electronic control units, and other active safety systems. As of December 31, 2016, including joint venture operations, the Company had approximately 78 production facilities in 25 countries, consisting of both component factories and assembly factories.
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