BorgWarner (NYSE:BWA) & Garrett Motion (NASDAQ:GTX) Financial Contrast

BorgWarner (NYSE:BWA) and Garrett Motion (NASDAQ:GTX) are both consumer discretionary companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, risk, earnings, institutional ownership, profitability, analyst recommendations and dividends.

Institutional and Insider Ownership

95.7% of BorgWarner shares are held by institutional investors. Comparatively, 86.3% of Garrett Motion shares are held by institutional investors. 0.8% of BorgWarner shares are held by company insiders. Comparatively, 1.1% of Garrett Motion shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Volatility & Risk

BorgWarner has a beta of 1.2, indicating that its share price is 20% more volatile than the S&P 500. Comparatively, Garrett Motion has a beta of 0.95, indicating that its share price is 5% less volatile than the S&P 500.

Dividends

BorgWarner pays an annual dividend of $0.68 per share and has a dividend yield of 1.3%. Garrett Motion pays an annual dividend of $0.32 per share and has a dividend yield of 1.5%. BorgWarner pays out 28.9% of its earnings in the form of a dividend. Garrett Motion pays out 16.4% 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 1 consecutive years. Garrett Motion is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
BorgWarner	3.36%	19.61%	8.24%
Garrett Motion	9.97%	-52.43%	15.48%

Analyst Recommendations

This is a summary of recent recommendations and price targets for BorgWarner and Garrett Motion, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BorgWarner	0	3	11	0	2.79
Garrett Motion	0	2	6	0	2.75

BorgWarner presently has a consensus price target of $79.00, indicating a potential upside of 55.48%. Garrett Motion has a consensus price target of $37.00, indicating a potential upside of 76.02%. Given Garrett Motion’s higher possible upside, analysts clearly believe Garrett Motion is more favorable than BorgWarner.

Valuation and Earnings

This table compares BorgWarner and Garrett Motion”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BorgWarner	$14.32 billion	0.71	$277.00 million	$2.35	21.62
Garrett Motion	$3.58 billion	1.08	$310.00 million	$1.95	10.78

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

Summary

BorgWarner beats Garrett Motion on 9 of the 17 factors compared between the two stocks.

About BorgWarner

BorgWarner Inc. is a global automotive supplier that develops and manufactures technologies for passenger vehicles, commercial vehicles and other applications. Its products support vehicles powered by internal combustion engines as well as hybrid and electric vehicles. The company’s offerings include turbocharging systems, transmission components, electric motors, power electronics, battery and thermal-management systems, and technologies that help control emissions. BorgWarner supplies automakers and commercial-vehicle manufacturers around the world, with operations serving markets across North America, Europe and Asia.

About Garrett Motion

Garrett Motion designs and manufactures automotive technologies focused on improving vehicle performance, fuel efficiency and emissions. Its products include turbochargers for passenger vehicles and commercial vehicles, along with electric boosting technologies that support conventional, hybrid and electric powertrains. The company also develops technologies for zero-emission applications, including compressors for hydrogen fuel-cell systems. Its products and engineering services are used by automakers and commercial-vehicle manufacturers around the world.