BWA
BorgWarner Inc.
$67.54
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Overvalued
Trading 70.8% above fair value
You pay
$67.54
Bear
$34.61
Fair
$39.55
Bull
$44.50
Bear
$34.61
-48.8%
$2.47 × 14x P/E
Fair
$39.55
-41.4%
$2.47 × 16x P/E
Bull
$44.50
-34.1%
$2.47 × 18x P/E
Adjust Assumptions
16.0x
2.47$
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
27.3x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (38 analysts)
$84.33
Divergence from AlphaVal
53%
Summary
Applying a 16x P/E to adjusted EPS of $2.47, the base-case value is $39.55 per share.
Warnings
The company's reported profits differ from official accounting profits by 93%. Check what costs are being left out of the adjusted number.
Wall Street's average price target is $84.33 (from 38 analysts). Our estimate is 53% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples