BWA, Borgwarner Inc
Borgwarner Inc is a global product leader in clean and efficient technology solutions for combustion, hybrid and electric vehicles.
Read top to bottom, the owner's questions in the order an owner asks them: what the business is, whether the record holds, whether it survives and is any good, and what you would be paying. New to the questions? Start with the Method.
The business in brief
read the 10-K →What this business is and what moves its needle, read from the numbers in its filings. The quantitative detail is in the sections below; the verdict is left to you.
- What it is
- Revenue is Foundational products (82%) and eProducts (18%).
- What moves the needle
- How hard the assets work, and what the inputs cost. What decides it: utilization, how much of the capex merely keeps the assets running, and what a downturn does to a heavy fixed-cost base.
- Is it a good business?
- Return on capital has sat near the cost of capital (median 8%). Owner earnings agree: roughly 6% of revenue reaches owners as cash, consistently. This is price-taker territory, where the balance sheet and the cycle matter more than any multiple; the 10-K is where you look.
Every line here is arithmetic from the company's own filings, not a model's opinion, and each figure appears in full in the sections below.
Where the money comes from
read the 10-K →Revenue spreads across 4 segments, the largest Turbos & Thermal Technologies at 40%.
- Turbos & Thermal Technologies40%$5.8B
- Drivetrain & Morse Systems39%$5.6B
- PowerDrive Systems16%$2.3B
- Battery & Charging Systems4%$590M
From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.
The record, 2016–2025
realized figures from each filing, no estimates| 2016’16 | 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | TTMTTMMar 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| RevenueRevenue | $9.1B | $9.8B | $10.5B | $10.2B | $10.2B | $11.8B | $12.6B | $14.2B | $14.1B | $14.3B | $14.3B |
| Operating marginOp. mgn | 10.7% | 10.9% | 11.3% | 12.8% | 6.1% | 7.7% | 8.0% | 8.2% | 3.9% | 3.7% | 4.4% |
| Net incomeNet inc. | $595M | $440M | $931M | $746M | $500M | $537M | $944M | $625M | $338M | $277M | $362M |
| EPS (diluted)EPS | $2.76 | $2.08 | $4.44 | $3.61 | $2.34 | $2.24 | $3.99 | $2.67 | $1.50 | $1.28 | $1.74 |
| Owner earningsOwner earn. | $535M | $620M | $580M | $527M | $743M | $792M | $947M | — | — | — | $1.1B |
| ROICROIC | 13% | 10% | 17% | 14% | 4% | 9% | 7% | 8% | 4% | 3% | 5% |
| CapexCapex | $501M | $560M | $546M | $481M | $441M | $514M | $622M | $832M | $671M | $469M | $493M |
| Capex / revenueCapex/rev | 5.5% | 5.7% | 5.2% | 4.7% | 4.3% | 4.4% | 4.9% | 5.9% | 4.8% | 3.3% | 3.4% |
| Capex vs depreciationCapex/dep | 1.28× | 1.37× | 1.27× | 1.10× | 0.78× | 0.90× | 1.13× | 1.43× | 1.00× | 0.65× | 0.70× |
| Total debtDebt | $2.1B | $2.1B | $2.1B | $1.9B | $3.7B | $4.3B | $4.1B | $3.7B | $4.1B | $3.9B | $3.9B |
| Cash & investmentsCash+inv | $444M | $545M | $739M | $832M | $1.6B | $1.8B | — | — | — | — | $1.5B |
| Net debt / (cash)Net debt | $1.6B | $1.6B | $1.3B | $1.1B | $2.1B | $2.4B | $4.1B | $3.7B | $4.1B | $3.9B | $2.4B |
Owner’s Scorecard
Will it survive?
- Can it pay its interest? 10.3×ComfortableOperating income $536M ÷ interest expense $52M
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
- HighTotal debt $3.9B ÷ operating income $536M
Years of operating profit it would take to repay all debt. A first read, not a credit rating: it's gross debt (not netted against cash) over EBIT (not EBITDA), and a cyclical year distorts it.
- Debt, net of cash $2.1BMeaningful net debtCash $1.8B − debt $3.9B
Netting $1.8B of cash and short-term investments against $3.9B of debt leaves $2.1B owed, about 3.8× a year's operating profit, versus the gross figure above. Net debt is the leverage figure that matters; the gross ratio above ignores the cash already set against it. Strategic or illiquid investments aren't counted here.
- Not enough data
The filing data didn't include the inputs for this check.
Is it a good business?
- Below averageNOPAT $319M ÷ invested capital $7.5B (debt + equity − cash)
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
- SolidOwner Earnings $1.1B = operating cash $1.6B − capex $469M
What an owner could take out without starving the business. That's 8% of revenue. Treating stock comp as the real expense it is (less $66M of SBC) leaves $1.0B. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).
- Cash-backedCash from ops $1.6B ÷ net income $277M
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.
How is the cash used?
- Returns about halfDividends + buybacks $627M ÷ Owner Earnings $1.1B
Of $1.1B Owner Earnings, $627M (57%) went back to shareholders, $119M dividends, $508M buybacks. Net of $66M stock comp, the real buyback was about $442M. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
- Investing or harvesting? 0.65×HarvestingCapex $469M ÷ depreciation $719M
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.
Durability & moat, 2016–2025
A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says, judgments, not another chart of the numbers.
- Profitable years 10 of 10
Never lost money over the record, the earnings stability Graham insisted on.
- Return on capital ≥ 15% 1 of 10 yrs
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
- Operating margin 11% (FY2016) → 4% (FY2025)
Margins slipped over the record, competition or costs are biting in.
- Reinvestment, incremental ROIC −5%
Reinvested capital earned a negative return, the business spent money to shrink its own economics.
- Owner earnings growth +5%/yr
Free cash to owners grew about 5% a year over the record.
- Worst year 2025 · 3.7% op. margin
Stayed profitable even in its hardest year, the resilience that survives recessions.
- Share count +0.1%/yr
Roughly flat share count, little dilution, little buyback.
- Dividend record paid
Paid a dividend in 10 of the years on record.
Solvent is not the same as cheap; growing is not the same as good. These are vital signs, not a verdict, the judgment is yours, and the filing is one click away.
How the cash was used, 2016–2022
Over the record, the business generated $8.4B of operating cash, and how management split it is, as Buffett insists, the job that matters most. Here it reads as a balanced allocator, splitting cash between the business, owners, and the balance sheet.
- Reinvested$3.7B · 44%
- Dividends$988M · 12%
- Buybacks$1.1B · 13%
- Retained (debt / cash)$2.7B · 32%
It reinvested $3.7B (44%) back into the business and returned $2.1B (25%) to owners, $988M in dividends, $1.1B in buybacks. Total debt rose $1.8B across the span.
Buybacks are gross of stock issued to employees; net of that, the real return to owners is lower (see Management & pay). And the mix alone doesn't grade management, what matters is the return earned on the dollars reinvested (see incremental ROIC in the durability report).
Management & pay
read the proxy →Two questions Buffett actually asks about pay: is stock compensation, a real expense, whatever the income statement pretends, quietly large, and is the top wildly out of line with the floor. He's no populist about it; he just wants pay that's rational and earned, and comp committees that aren't lapdogs.
- CEO pay ratio326:1
What the chief earns for every dollar the median employee makes, per the 2026 proxy. A high ratio isn't proof of anything, some businesses are genuinely top-heavy in scarce skill, but a runaway figure is where Buffett starts asking whether the board is doing its job or just keeping the chair company.
- Stock-based compensation$66M
The slice of the business handed to employees in shares this year, 0% of revenue, equal to 12% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. And note the trap, the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Graham’s defensive-investor test
4 of 6 metGraham gave the defensive investor seven numerical criteria in The Intelligent Investor. Here they are, run mechanically on the filings, his framework, not our verdict. Meeting them is a floor of safety, not a reason to buy; missing one is no veto, since many fine modern businesses fail his strictest liquidity tests by design. The worth is in seeing exactly where a company stands against the canon, every number sourced.
- Adequate size PassRevenue ≥ $2B · $14.3B
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity PassCurrent ratio ≥ 2× · 2.07×
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt NearDebt ≤ working capital · $3.9B vs $3.5B WC
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
- Earnings stability PassA profit every year (10-yr record) · no losses
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record PassUninterrupted dividends · paid every year (10)
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth MissEarnings +33% over the record · −37%
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Earnings are $1.28/share and book value $25.15/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Graham would be the first to say a checklist is a starting point, not an answer. These are his defensive, bargain-hunter's tests, the cigar-butt lens. Buffett and Munger grew past it, paying fair prices for wonderful businesses; that lens lives in the moat and owner-earnings work above, and both still matter. Clearing Graham’s tests earns a closer look; failing them earns harder questions, not a dismissal.
What the price implies
reverse-DCFA price is the one input we don't pull, you bring it. Type today's close (read it off any broker or quote site) and see the owner-earnings growth you'd have to believe to justify it, set beside what Borgwarner Inc has actually delivered. Nothing is stored; the number stays in your browser.
Enter a price above to run it.
Graham capped the multiple at 15×; Buffett and Munger let that rule go, a wonderful business can deserve 50× if the thesis holds. Read it as the bargain-hunter's floor, not a ceiling on good sense.
The discount rate is your interest rate, what a dollar years from now is worth today, anchored to the long-term Treasury yield (~4–5% today, plus whatever premium you want for risk). Drag it toward the risk-free rate and watch how much growth the price suddenly “needs”: interest rates are gravity on valuations.
Owner earnings $1.1B on 208M diluted shares; net debt $2.4B. This is a lens, not a price target, it says what you'd have to believe, not what the company is worth, and it runs on one year of (noisy) owner earnings at assumptions you can see and change.
What the filing emphasizes, FY2025
read the 10-K →Each year a 10-K must name what could go wrong, in the company's own words. Here are the ones Graham and Buffett would stop on, each set against the figure from the same filings that bears on it, anchored to a period you can find in the record above. We point; the judgment is yours.
- Customer concentrationBusiness
Who the revenue leans on. When one buyer is a large slice of sales, that buyer holds the pricing power, and its troubles become the company's.
“Sales to the Company's top ten customers represented 71% of sales for the year ended December 31, 2025.”
From the recordRevenue exposed (TTM)$14.3B - Pricing power & competitionMD&A
Whether the company sets its price or takes it. Durable pricing power is the surest mark of a moat; price competition is the surest mark there isn't one.
“This deterioration was due to dual sourcing actions by certain customers, pricing pressures from competitors and electric vehicle adoption delays in North America.”
From the recordOperating margin4.4% now (TTM), off a 12.8% peak (FY2019) - Supplier & input dependenceRisk Factors
A choke point upstream. A sole or limited supplier can dictate terms, and a single shortage can stop the line.
“As a result, we remain dependent on fewer sources of supply for certain components used in the manufacture of our products.”
From the recordGross-margin cushion (TTM)19% - Debt terms & refinancingMD&A
The fine print behind the debt. Covenants and near-term maturities decide who is really in control when a year goes badly.
“The credit facility agreement contains customary events of default and one key financial covenant, which is a debt-to-EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) ratio.”
From the recordBalance sheet (TTM)$2.1B meaningful net debt · interest covered 10.3× - Litigation & contingenciesMD&A
Claims an owner inherits. Most disclosure is boilerplate; this fires only on an actual matter, a named suit, a settlement, a contingency, a number.
“The change in Other operating expense, net was primarily due to: During the year ended December 31, 2025, the Company recorded a charge of $40 million related to a legal settlement, inclusive of associated legal fees.”
A judgment, not a number, weigh it against the filing yourself. - Cyclicality & demandRisk Factors
How the business behaves when the economy turns. A cyclical earns its keep across the whole cycle, not at the peak.
“Automotive and truck production and sales are cyclical and sensitive to general economic conditions, geopolitical and trade-related issues and other factors, including interest rates, declines in the availability of consumer credit, increased borrowing costs and consumer spending and preferences.”
From the recordWorst year on record3.7% operating margin (FY2025) - Regulation & policyMD&A
Rules that can rewrite the economics, tariffs, antitrust, data, export controls.
“Tariff expense resulted in a year-over-year increase in cost of sales of approximately $108 million.”
A judgment, not a number, weigh it against the filing yourself.
What changed, FY2025 vs FY2024
read the 10-K →Most of a 10-K is boilerplate carried over verbatim; the signal is in what's new. These lines appear this year and weren't there last, figure updates filtered out, so only the language shift remains.
- “If the carrying value of a long-lived asset is considered impaired, an impairment charge is recorded for the amount by which the carrying value of the long-lived asset exceeds its fair value, calculated based on independent appraisals, discounted cash flows, estimated salvage value, or estimated ord…”
- “The Company's insurance policies (less applicable deductibles) covered the repair or replacement of the Company's assets that incurred loss or damage and provided coverage for interruption to its business, including lost profits, and reimbursement for other expenses and costs that were incurred rela…”
- “The increase was also due to approximately $35 million of volume, mix and net new business driven by higher transfer case volumes in the Americas, partially offset by lower sales in China and downtime at one of the Company's European customers due to a cyber related shutdown.”
- “Sales increased approximately $52 million related to favorable volume, mix and net new business and higher eProduct sales, partially offset by unfavorable customer pricing and downtime at one of the Company's European customers due to a cyber-related shutdown.”
- “Additional risks associated with joint ventures include one or more partners failing to satisfy contractual obligations, the ability to enforce such obligations, conflicts arising between us and any of our partners, a change in the ownership of any of our partners and less of an ability to control c…”
Classic text analysis over the filing itself, no model wrote a word of this, and every quote is the company's own.
Peers, Autos & parts
The same industry, side by side on owner economics, compare, don't rank by a single number.● marks best in the group.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| FFord Motor Co | $187.3B | 7% | -4.9% | -55% | 7% |
| GMGeneral Motors Company | $168.0B | 40% | 1.7% | 2% | 10% |
| TSLATesla, Inc. | $94.8B | 18% | 4.6% | 4% | 7% |
| PCARPaccar Inc | $28.4B | 20% | 10.6% | 15% | 13% |
| LEALear Corp | $23.3B | 6% | 3.3% | 9% | 2% |
| APTVAptiv PLC | $20.4B | 19% | 5.8% | 4% | 7% |
| BWABorgwarner Inc | $14.3B | 19% | 3.7% | 4% | 8% |
| RIVNRivian Automotive, Inc. / DE | $5.4B | 3% | -66.5% | -52% | -46% |