BorgWarner (NYSE: BWA) and Delphi Automotive PLC (NYSE:DLPH) are both large-cap auto/tires/trucks companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, valuation, risk, earnings, dividends, analyst recommendations and institutional ownership.

Valuation and Earnings

This table compares BorgWarner and Delphi Automotive PLC’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
BorgWarner $9.27 billion 1.18 $1.54 billion $0.89 58.28
Delphi Automotive PLC $17.01 billion 1.58 $3.06 billion $4.72 21.28

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

Institutional and Insider Ownership

91.1% of BorgWarner shares are held by institutional investors. Comparatively, 90.1% of Delphi Automotive PLC shares are held by institutional investors. 0.7% of BorgWarner shares are held by company insiders. Comparatively, 0.3% of Delphi Automotive PLC shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Dividends

BorgWarner pays an annual dividend of $0.56 per share and has a dividend yield of 1.1%. Delphi Automotive PLC pays an annual dividend of $1.16 per share and has a dividend yield of 1.2%. BorgWarner pays out 62.9% of its earnings in the form of a dividend. Delphi Automotive PLC pays out 24.6% 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 raised its dividend for 2 consecutive years. Delphi Automotive PLC is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares BorgWarner and Delphi Automotive PLC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BorgWarner 2.06% 20.75% 8.17%
Delphi Automotive PLC 7.51% 60.14% 14.35%

Analyst Recommendations

This is a summary of current ratings and target prices for BorgWarner and Delphi Automotive PLC, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BorgWarner 3 7 4 0 2.07
Delphi Automotive PLC 1 3 15 0 2.74

BorgWarner currently has a consensus target price of $44.00, indicating a potential downside of 15.17%. Delphi Automotive PLC has a consensus target price of $102.11, indicating a potential upside of 1.65%. Given Delphi Automotive PLC’s stronger consensus rating and higher probable upside, analysts clearly believe Delphi Automotive PLC is more favorable than BorgWarner.

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, Delphi Automotive PLC has a beta of 1.36, suggesting that its share price is 36% more volatile than the S&P 500.

Summary

Delphi Automotive PLC beats BorgWarner on 13 of the 17 factors compared between the two stocks.

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.

Delphi Automotive PLC Company Profile

Delphi Automotive PLC is a global technology company serving the automotive sector. The Company designs and manufactures vehicle components, and provides electrical and electronic, powertrain and active safety technology solutions to the global automotive and commercial vehicle markets. The Company’s segments include Electrical/Electronic Architecture, Powertrain Systems, and Electronics and Safety. The Electrical/Electronic Architecture segment provides complete design of the vehicle’s electrical architecture, including connectors, wiring assemblies and harnesses, electrical centers and hybrid high voltage and safety distribution systems. The Powertrain Systems segment offers products for engine management systems (EMS). The Electronics and Safety segment offers a range of electronic and safety equipment and software in the areas of controls, security, infotainment, communications and safety systems.

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