Critical Survey: BorgWarner (BWA) & Metaldyne Performance Group (MPG)
BorgWarner (NYSE: BWA) and Metaldyne Performance Group (NYSE:MPG) are both auto/tires/trucks companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, profitability, earnings, institutional ownership and dividends.
Volatility and Risk
BorgWarner has a beta of 1.76, indicating that its stock price is 76% more volatile than the S&P 500. Comparatively, Metaldyne Performance Group has a beta of 2.07, indicating that its stock price is 107% more volatile than the S&P 500.
This table compares BorgWarner and Metaldyne Performance Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Metaldyne Performance Group||2.60%||9.80%||2.11%|
Valuation and Earnings
This table compares BorgWarner and Metaldyne Performance Group’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|BorgWarner||$9.27 billion||1.19||$1.54 billion||$0.89||58.65|
|Metaldyne Performance Group||N/A||N/A||N/A||$1.44||15.38|
BorgWarner has higher revenue and earnings than Metaldyne Performance Group. Metaldyne Performance Group is trading at a lower price-to-earnings ratio than BorgWarner, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings and price targets for BorgWarner and Metaldyne Performance Group, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Metaldyne Performance Group||0||2||0||0||2.00|
BorgWarner currently has a consensus price target of $45.13, indicating a potential downside of 13.54%. Metaldyne Performance Group has a consensus price target of $17.50, indicating a potential downside of 20.99%. Given BorgWarner’s stronger consensus rating and higher probable upside, research analysts clearly believe BorgWarner is more favorable than Metaldyne Performance Group.
Institutional and Insider Ownership
91.1% of BorgWarner shares are owned by institutional investors. Comparatively, 18.6% of Metaldyne Performance Group shares are owned by institutional investors. 0.7% of BorgWarner shares are owned by company insiders. Comparatively, 5.1% of Metaldyne Performance Group shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
BorgWarner pays an annual dividend of $0.56 per share and has a dividend yield of 1.1%. Metaldyne Performance Group pays an annual dividend of $0.37 per share and has a dividend yield of 1.7%. BorgWarner pays out 62.9% of its earnings in the form of a dividend. Metaldyne Performance Group pays out 25.7% 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. Metaldyne Performance Group has raised its dividend for 2 consecutive years. Metaldyne Performance Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
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.
Metaldyne Performance Group Company Profile
Metaldyne Performance Group Inc. provides components for use in engine, transmission and driveline (Powertrain) and chassis, suspension, steering and brake component (Safety-Critical) Platforms for the global light, commercial and industrial vehicle markets. The Company produces these components using complex metal-forming manufacturing technologies and processes for a customer base of vehicle original equipment manufacturers and Tier I suppliers. The Company operates through three segments: HHI, Metaldyne and Grede. Its metal-forming manufacturing technologies and processes include Aluminum Die Casting, Forging, Iron Casting and Powder Metal Forming, as well as value-added manufacturing processes, such as Advanced Machining and Assembly. These technologies and processes are used to create a range of customized Powertrain and Safety-Critical components that address requirements for power density, power generation, power/torque transfer, strength and noise, vibration and harshness.
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