BorgWarner Inc

TD Cowen told clients on Tuesday that the recent selloff in auto stocks over fears of Chinese automakers entering the US market is "overdone," as President Xi Jinping arrives in Washington on Wednesday for three days of talks with President Trump. Senior analyst Itay Michaeli wrote that a shift in US import policy at the summit is "very unlikely," though he urged investors to prepare for that eventuality anyway, noting that most industry contacts share that view. A coalition led by the Alliance for Automotive Innovation, joined by the American Automotive Policy Council, dealer group NADA, and supplier association MEMA, sent a letter to Trump urging the administration to "keep the door firmly shut to Chinese automakers seeking to sell, import, or manufacture vehicles inside the US," crediting Trump's 100% tariffs on Chinese vehicles and a Commerce Department rule barring Chinese connected-car software with shielding the US from the surge seen in Europe, Australia, Southeast Asia, Mexico, and South America. TD Cowen laid out guardrails under which Chinese automakers could be forced in through minority-owned joint ventures with domestic players and probably barred from building full-size trucks, and Michaeli argued such structures "might even prove EPS accretive given sizable D3 EV losses," with Stellantis arguably having the most to gain given its lower North America EBIT starting point. The firm sees EV suppliers and charging networks like ChargePoint and EVgo as beneficiaries of faster US EV adoption, and parts makers with existing ties to Chinese OEMs, including BorgWarner and Aptiv, as "better positioned" than most, while the math is mixed for EV pure-plays Tesla, Rivian, and Lucid. The catch, per Michaeli, is that Big Three stock multiples could still suffer on the long-term risk that any initial restrictions eventually get lifted.

UBS has highlighted 10 industrial companies it sees as positioned for a broader capital-spending cycle, with manufacturing, transportation, defense and construction among the areas expected to gain from improving investment conditions. The list includes Lockheed Martin, United Airlines, C.H. Robinson Worldwide, BorgWarner, UL Solutions, Solstice Advanced Materials, Eaton, Advanced Drainage Systems, United Rentals and Packaging Corp. of America, according to a Wednesday report. UBS said the industrial sector is emerging from a prolonged manufacturing downturn, while inventory trends and short-cycle indicators have improved, and it pointed to stronger operating cash flow outside technology as a source of resources for investment. Among the individual companies, UBS assigned price targets ranging from $80 for Solstice Advanced Materials to $1,350 for United Rentals, with Advanced Drainage Systems carrying the largest implied upside at 62%, based on Sept. 11 closing prices. The bank cited potential catalysts including defense demand, airline earnings, freight productivity, electrification, construction activity and packaging pricing, while higher interest rates and weaker economic growth remain risks to the broader industrial outlook.

BorgWarner reported second quarter 2026 sales of over $3.6 billion, with adjusted operating margin expanding 100 basis points to 11.3% and adjusted earnings per share growing 17% year-over-year. The company announced seven new business awards across its foundational and eProducts portfolios, including an eTurbo program with a major European OEM and an integrated drive module award with a global OEM. BorgWarner also increased its full-year adjusted EPS guidance to a range of $5.05 to $5.30 per diluted share, up from $5.00 to $5.20, and its Board approved a $1 billion increase to the share repurchase authorization, bringing the total to $1.35 billion. The company returned approximately $134 million to shareholders in the quarter through buybacks and dividends, and it plans to invest an incremental $10 million to $15 million in industrial R&D in the second half of 2026 to accelerate product readiness for data center and other industrial markets.

BorgWarner increased its remaining share repurchase authorization to US$1,350 million through 2029 after completing a US$1,061.45 million buyback program. The company also reported second-quarter 2026 sales of US$3,648 million and net income of US$277 million, and announced multiple new propulsion and variable cam timing program awards across Europe and China. These developments highlight BorgWarner's strategy of pairing ongoing combustion and hybrid content wins with growing electrified propulsion awards while returning capital to shareholders.

BorgWarner has secured new variable cam timing contracts in Europe and China. In Europe, the company won a programme life extension and a significant volume increase for a leading premium carmaker's V6 engine family, with the newly awarded volume increase and life extension set to start in January 2027. In China, it secured a conquest award for a major domestic carmaker's 1.5-litre turbocharged petrol engine family, replacing the previous supplier, with start of production planned for September 2026. Both contracts centre on BorgWarner's centre-bolt Cam Torque Actuated VCT system, which the company says enables superior cam phasing response, stronger lock-pin engagement and reduced oil consumption for improved fuel economy compared with oil-pressure actuated designs.

Several major companies announced dividend declarations. Apple declared a cash dividend of $0.27 per share, payable on August 13, 2026 to shareholders of record on August 10, 2026. Amgen declared a $2.52 per share dividend for the third quarter of 2026, payable on September 11, 2026 to stockholders of record on August 21, 2026. Huntsman declared a $0.0875 per share cash dividend, payable on September 30, 2026 to stockholders of record on September 15, 2026. Boise Cascade declared a quarterly dividend of $0.23 per share, an increase of $0.01 per share or 5%, payable on September 16, 2026 to stockholders of record on September 1, 2026. Alcoa declared a quarterly cash dividend of $0.10 per share, payable on August 27, 2026 to stockholders of record on August 11, 2026. BorgWarner declared a quarterly cash dividend of $0.17 per share, payable on September 15, 2026 to stockholders of record on September 1, 2026.

BorgWarner has secured a new dual-clutch transmission program with a Chinese motorcycle customer, with production set to begin in the third quarter of 2027. The integrated system includes dual clutches, hydraulic control modules, and clutch control software for two-wheeled motorcycles and four-wheeled vehicles with engine displacement above 500 cc. BorgWarner says the deal marks its evolution from a key component supplier to a system-level solution provider, combining hardware and software to support the customer’s growth in China and expansion into Europe, North America, and other overseas markets. The company has delivered nearly 10 million passenger car DCT units and is leveraging that expertise to develop a dedicated motorcycle DCT system aimed at improving fuel economy and the riding experience.

BorgWarner may be positioned to beat earnings estimates again in its next quarterly report, according to Zacks Investment Research. The auto parts supplier has topped consensus estimates in each of the last two quarters, delivering an average surprise of 11.64%. For the most recent quarter, BorgWarner reported earnings of $1.24 per share versus the Zacks Consensus Estimate of $1.16, a 6.90% beat, while the prior quarter saw earnings of $1.35 per share against a $1.16 estimate, a 16.38% surprise. The company currently holds a Zacks Rank #2 (Buy) and a positive Earnings ESP of +4.85%, a combination that Zacks research indicates produces a positive earnings surprise nearly 70% of the time. BorgWarner's next earnings report is expected on August 5, 2026.

BorgWarner has been included in the third edition of the World's Most Sustainable Companies 2026 ranking presented by TIME and Statista. The list recognizes 750 leading companies in corporate social responsibility from around the globe, selected from over 5,800 of the world's largest and most influential companies assessed on more than 20 key performance indicators related to sustainability. BorgWarner is one of 21 companies recognized in the Automotive Industry & Suppliers category. President and CEO Joseph Fadool said the second consecutive year on the list reflects the company's commitment to embedding sustainability across its business and advancing emissions-reducing technologies.

Zacks Investment Research identified BorgWarner, Caterpillar, and United Rentals as three hidden AI revolution stocks to buy now. The firm notes that $700 billion is expected to be spent on AI this year, creating opportunities for old-economy companies supplying the AI infrastructure buildout, particularly data centers. BorgWarner, known for auto propulsion, is now building turbines for data centers, with shares up 56% year-to-date and a forward P/E of 14. Caterpillar, up 66.9% year-to-date, is seeing earnings growth of 29.2% expected in 2026 from data center demand and carries a Zacks Rank #1 Strong Buy. United Rentals, the world's largest equipment rental company, reported record first quarter 2026 earnings and trades at a forward P/E of 22.6 with shares up 29.6% year-to-date.