BorgWarner's Q4 Earnings Beat Expectations, Revenues Rise Y/Y

BorgWarner BWA reported adjusted earnings of $1.35 per share for the fourth quarter of 2025, which surpassed the Zacks Consensus Estimate of $1.16 and increased from $1.01 recorded in the prior-year quarter. Better-than-expected adjusted operating income from the Drivetrain & Morse Systems segment drove the outperformance. The automotive equipment supplier reported net sales of $3.57 billion, up 3.9% year over year. The figure also topped the Zacks Consensus Estimate of $3.51 billion.

BorgWarner Inc. Price, Consensus and EPS Surprise

BorgWarner Inc. price-consensus-eps-surprise-chart | BorgWarner Inc. Quote

BWA’s Segmental Performance

Turbos & Thermal Technologies: Net sales totaled $1.4 billion in the reported quarter, down from $1.41 billion in the year-ago period. The figure , however, beat our estimate of $1.39 billion. Adjusted operating income of $198 million decreased from $223 million recorded in the year-ago quarter and missed our estimate of $217 million.

Drivetrain & Morse Systems: Net sales totaled $1.41 billion in the reported quarter, up from $1.35 billion in the year-ago period. The metric also outpaced our estimate of $1.37 billion. Adjusted operating income of $271 million increased from $240 million recorded in the year-ago period and surpassed our estimate of $261million.

PowerDrive Systems: Sales from the segment were $623 million, up from $525 million in the year-ago period and topped our estimate of $590 million. The segment reported an adjusted operating income of $28 million againstcompared with the loss of $14 million in the corresponding period of 2024.

Battery & Charging Systems: Sales from the segment were $149 million, which decreased from $162 million a year ago but topped our estimate of $132 million. The segment reported an adjusted operating income of $2 million against compared with the loss of $14 million in the corresponding period of 2024.

Balance Sheet, Cash Flow, Dividend & Buyback

As of Dec. 31, 2025, BorgWarner had $2.31 billion in cash/cash equivalents/restricted cash compared with $2.09 billion as of Dec. 31, 2024. As of the end of fourth-quarter 2025, long-term debt was $3.89 billion, up from $3.76 billion recorded as of Dec. 31, 2024.

Net cash provided by the operating activities from continuing operations was $619 million in the quarter. Capital expenditures totaled $162 million. FCF totaled $470 million.

2026 Guidance

For full-year 2026, the company anticipates net sales in the band of $14.1-$14.3 billion compared with 14.32 billion in 2025. Adjusted operating margin is expected in the band of 10.7-10.9% compared with 10.7% in 2025.

Adjusted earnings per share are estimated in the range of $5-$5.20 compared with $4.91 in 2025. Operating cash flow is forecasted in the range of $1.6- $1.7 billion compared with $1.65 billion in 2025. Free cash flow is projected in the band of $900 million to $1.1 billion compared with $1.21 billion reported in 2025.

BWA’s Zacks Rank & Key Picks

BorgWarner carries a Zacks Rank #3 (Hold) at present. 

Some better-ranked stocks in the auto space are Modine Manufacturing Company MOD, Strattec Security Corporation STRT and PHINIA Inc. PHIN, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for MOD’s fiscal 2026 sales and earnings implies year-over-year growth of 21.2% and 17.5%, respectively. The EPS estimate for fiscal 2026 and 2027 has improved 13 cents and 65 cents, respectively, in the past seven days. 

The Zacks Consensus Estimate for STRT’s fiscal 2026 earnings implies year-over-year growth of 0.4%. EPS estimates for fiscal 2026 have improved 16 cents in the past 30 days. EPS estimates for fiscal 2027 have improved 48 cents in the past seven days.

The Zacks Consensus Estimate for PHIN’s 2025 sales and earnings implies year-over-year growth of 1.1% and 33.4%, respectively. EPS estimates for 2025 and 2026 have improved 47 cents and 66 cents, respectively, in the past 60 days. 

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This article originally published on Zacks Investment Research (zacks.com).

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