GET DAILY SIGNALSBorgWarner (BWA) Q3 2026: Adjusted EPS Rises +12% as Margins Expand Despite Lower Sales
Key Takeaways
- Net sales came in at $3,487 million, down from $3,591 million a year earlier, while U.S. GAAP diluted earnings per share (EPS) rose to $1.08 from $0.73.
- Adjusted operating margin expanded 20 basis points to 10.9%, and adjusted EPS increased 12% year over year despite lower industry production.
- Light vehicle eProduct sales climbed 33% to approximately $630 million, led by strength in Europe.
- BorgWarner raised full-year 2026 adjusted EPS guidance to $5.20–$5.35 and narrowed its net sales outlook to $14.0–$14.2 billion.
- Free cash flow of $195 million helped fund roughly $210 million returned to shareholders through buybacks and dividends.
- Nine new business awards and continued progress in the data center and industrial portfolio reinforced the company's long-term growth plans.
Earnings Context and Why It Matters
BorgWarner's third-quarter 2026 report offers a useful snapshot of how the automotive supplier is handling a softer production environment. The company has relied on disciplined cost controls, share repurchases, and its expanding electrification portfolio to support profitability even as light vehicle output weakens. The results also provide a progress update on its efforts to move beyond core automotive markets into data centers and industrial power applications. With guidance for adjusted EPS raised and margins holding steady, this report helps clarify whether cost discipline and product diversification can sustain earnings growth through a softer period in vehicle production.
Reported Results
For the third quarter ended September 30, 2026, BorgWarner reported net sales of $3,487 million, a decline from $3,591 million in the prior-year period. Organic net sales, excluding currency and the Battery Energy Systems segment, fell roughly 1.6%, largely in line with the decline in light vehicle market production.
U.S. GAAP net earnings attributable to BorgWarner were $221 million, or $1.08 per diluted share, compared with $158 million, or $0.73 per diluted share, a year earlier. On an adjusted basis, operating income was $381 million, yielding a 10.9% adjusted operating margin — up 20 basis points year over year — while adjusted EPS rose 12%, supported by lower taxes and a reduced share count.
By segment, Turbos & Thermal Technologies sales were $1,372 million, Drivetrain & Morse Systems $1,346 million, and Battery Energy Systems $78 million, while PowerDrive Systems grew to $705 million from $582 million. Adjusted operating losses narrowed in both PowerDrive Systems and Battery Energy Systems.
The company raised full-year adjusted EPS guidance to $5.20–$5.35 (from $5.05–$5.30) and narrowed its net sales outlook to $14.0–$14.2 billion. It maintained its adjusted operating margin outlook of 10.7%–10.9% and free cash flow guidance of $900 million–$1.1 billion.
Market Reaction and Investor Sentiment
BorgWarner's results arrived against a backdrop of softer global light vehicle production, making its margin expansion and higher EPS guidance the standout signals. Management credited the improved profitability to ongoing cost-reduction actions, productivity gains, and supply-chain savings, while a lower effective tax rate and active share repurchases further lifted per-share results. The narrowing of the top-line outlook at the high end, linked to lower industry production expectations, was offset by the EPS guidance increase. Sentiment ahead of the report focused on whether BorgWarner could sustain earnings power amid volume headwinds, and the third-quarter figures suggested the company's cost discipline and capital-return strategy are carrying more weight with investors than the sales decline itself.
Forward Outlook and Key Factors to Monitor
Looking ahead, investors will likely focus on whether BorgWarner can convert its guidance raise into full-year execution. Management now expects 2026 net sales of $14.0 billion to $14.2 billion and adjusted EPS of $5.20 to $5.35, with a lower full-year effective tax rate of approximately 22.5% supporting earnings.
One key theme to watch is the pace of electrification. Light vehicle eProduct sales grew 33% in the quarter, and nine new business awards — spanning foundational combustion, hybrid, and battery-electric architectures — point to continued customer demand across powertrain types. Investors should monitor how these awards translate into future revenue.
A second factor is the diversification into data centers and industrial markets. BorgWarner's turbine generator system remains on track for a 2027 launch with expected first-year sales exceeding $300 million, while battery energy storage systems and bi-directional microgrid inverters continue moving through customer validation and certification.
Finally, capital allocation and cash conversion remain central. With free cash flow of $195 million in the quarter and a commitment to return roughly 70% of free cash flow to shareholders, buybacks and dividends are likely to remain a meaningful support for EPS. Balancing these investments against production uncertainty and battery-segment declines will be a key test in the quarters ahead.
Using Tickeron’s AI Screener for Deeper Analysis
I also checked this using Tickeron’s AI Screener to see how BorgWarner compares to others in the industry. The tool helps filter stocks by technical patterns, fundamentals, and AI-driven signals, which can surface comparable ideas quickly. It has become a regular part of my research workflow when evaluating suppliers like this one.
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Contributor
Sergey Savastiouk, Ph.D. has a degree in Applied Mathematics from Moscow University and has extensive experience as an entrepreneur, investor, manager, and mathematician. His professional expertise is in applied mathematics, mathematical modeling, system and pattern analysis, and software and hardware system integration. He has served as the CEO of several hi-tech start-up companies and nonprofit organizations, which has given him proven capabilities in business strategy for high-tech start-up companies, market assessment, company formation, team building, product development, marketing, and sales. He has published numerous articles in journals and magazines on related fields. As a retail investor, he spent 15 years developing his proprietary trading and quantitative algorithms (now Tickeron’s A.I.), which brought him significant returns in trading the stock market. His current work and goal in founding Tickeron is to bring professional, sophisticated stock market analysis capabilities to retail investors via an easy-to-use interface.
BWA's RSI Oscillator is remaining in oversold zone for 2 days
It is expected that a price bounce should occur soon.
Technical Analysis (Indicators)
Bullish Trend Analysis
The Stochastic Oscillator demonstrated that the ticker has stayed in the oversold zone for 1 day, which means it's wise to expect a price bounce in the near future.
Following a +1.47% 3-day Advance, the price is estimated to grow further. Considering data from situations where BWA advanced for three days, in 190 of 315 cases, the price rose further within the following month. The odds of a continued upward trend are 60%.
BWA may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
Bearish Trend Analysis
The Momentum Indicator moved below the 0 level on October 09, 2026. You may want to consider selling the stock, shorting the stock, or exploring put options on BWA as a result. In 61 of 95 cases where the Momentum Indicator fell below 0, the stock fell further within the subsequent month. The odds of a continued downward trend are 64%.
The Moving Average Convergence Divergence Histogram (MACD) for BWA turned negative on October 14, 2026. This could be a sign that the stock is set to turn lower in the coming weeks. Traders may want to sell the stock or buy put options. Tickeron's A.I.dvisor looked at 43 similar instances when the indicator turned negative. In 26 of the 43 cases the stock turned lower in the days that followed. This puts the odds of success at 60%.
Following a 3-day decline, the stock is projected to fall further. Considering past instances where BWA declined for three days, the price rose further in 50 of 62 cases within the following month. The odds of a continued downward trend are 64%.
The Aroon Indicator for BWA entered a downward trend on October 27, 2026. This could indicate a strong downward move is ahead for the stock. Traders may want to consider selling the stock or buying put options.
Fundamental Analysis (Ratings)
The Tickeron Valuation Rating of 53 (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (1.875) is normal, around the industry mean (0.753). P/E Ratio (25.000) is within average values for comparable stocks, (40.047). Projected Growth (PEG Ratio) (0.329) is also within normal values, averaging (1.494). Dividend Yield (0.013) settles around the average of (0.042) among similar stocks. P/S Ratio (0.916) is also within normal values, averaging (49.456).
The Tickeron Price Growth Rating for this company is 62 (best 1 - 100 worst), indicating steady price growth. BWA’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Profit vs. Risk Rating rating for this company is 63 (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 90, placing this stock slightly better than average.
The Tickeron SMR rating for this company is 78 (best 1 - 100 worst), indicating slightly better than average sales and a considerably profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron PE Growth Rating for this company is 84 (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
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General Information
a manufacturer of engineered components for automotive powertrain applications
Industry AutoPartsOEM