Financial Comparison: Adient (ADNT) & BorgWarner (BWA)

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

Analyst Ratings

This is a breakdown of current ratings and price targets for Adient and BorgWarner, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Adient 2 8 2 0 2.00
BorgWarner 0 3 10 0 2.77

Adient presently has a consensus target price of $57.67, indicating a potential upside of 91.08%. BorgWarner has a consensus target price of $56.33, indicating a potential upside of 48.83%. Given Adient’s higher probable upside, analysts clearly believe Adient is more favorable than BorgWarner.

Earnings & Valuation

This table compares Adient and BorgWarner’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Adient $16.21 billion 0.17 $877.00 million $9.35 3.23
BorgWarner $9.80 billion 0.81 $439.90 million $3.89 9.73

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

Dividends

Adient pays an annual dividend of $1.10 per share and has a dividend yield of 3.6%. BorgWarner pays an annual dividend of $0.68 per share and has a dividend yield of 1.8%. Adient pays out 11.8% of its earnings in the form of a dividend. BorgWarner pays out 17.5% 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. Adient is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

97.9% of Adient shares are owned by institutional investors. Comparatively, 91.7% of BorgWarner shares are owned by institutional investors. 0.7% of Adient shares are owned by insiders. Comparatively, 0.7% of BorgWarner shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Adient and BorgWarner’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Adient 0.08% 14.27% 4.89%
BorgWarner 5.11% 22.83% 9.16%

Risk & Volatility

Adient has a beta of -0.6, suggesting that its share price is 160% less volatile than the S&P 500. Comparatively, BorgWarner has a beta of 1.88, suggesting that its share price is 88% more volatile than the S&P 500.

Summary

BorgWarner beats Adient on 10 of the 17 factors compared between the two stocks.

About Adient

Adient plc designs, manufactures, and markets a range of seating systems and components for passenger cars, commercial vehicles, and light trucks. The company operates through two segments, Seating and Interiors. The Seating segment produces automotive seat metal structures and mechanisms, foams, trims, fabrics, and seat systems. The Interiors segment produces instrument panels, floor consoles, door panels, overhead consoles, cockpit systems, decorative trims, and other products. The company operates in the Americas, Europe, China, and internationally. Adient plc was incorporated in 2016 and is based in Dublin, Ireland.

About BorgWarner

BorgWarner Inc. provides solutions for combustion, hybrid, and electric vehicles worldwide. It operates through two segments, Engine and Drivetrain. The Engine segment develops and manufactures turbochargers; and timing systems, such as timing chains, variable cam timing products, crankshaft and camshaft sprockets, tensioners, guides and snubbers, front-wheel drive transmission chains, four-wheel drive chains for light vehicles, and hybrid power transmission chains. It also provides emissions systems, including electric air pumps and exhaust gas recirculation (EGR) modules, EGR coolers, EGR valves, glow plugs, and instant starting systems; turbocharger actuators; and thermal systems products comprising viscous fan drives, polymer fans, and coolant pumps. The Drivetrain segment develops and manufactures friction and mechanical products, including dual and friction clutch modules, friction and separator plates, transmission bands, torque converter and one-way clutches, and torsional vibration dampers. It also offers control products comprising electro-hydraulic solenoids, transmission solenoid modules, and dual clutch control modules; torque management products, such as rear-wheel drive/all-wheel drive (AWD) transfer case systems, front wheel drive-AWD coupling systems, and cross-axle coupling systems; starters, alternators, and hybrid electric motors; and motor controllers, battery chargers, and uninterrupted power source systems. The company sells its products to original equipment manufacturers of light vehicles consisting of passenger cars, sport-utility vehicles, vans, and light trucks; commercial vehicles, such as medium-duty and heavy-duty trucks, and buses; and off-highway vehicles, including agricultural and construction machinery, and marine applications, as well as to tier one vehicle systems suppliers and the aftermarket for light, commercial, and off-highway vehicles. BorgWarner Inc. was founded in 1987 and is headquartered in Auburn Hills, Michigan.

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