Financial Comparison: Metaldyne Performance Group (MPG) & BorgWarner (BWA)

Metaldyne Performance Group (NYSE: MPG) and BorgWarner (NYSE:BWA) are both cyclical consumer goods & services companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, analyst recommendations, dividends, risk, institutional ownership, profitability and valuation.

Earnings & Valuation

This table compares Metaldyne Performance Group and BorgWarner’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Metaldyne Performance Group N/A N/A N/A $1.44 15.21
BorgWarner $9.27 billion 1.18 $1.54 billion $0.89 58.28

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

Risk and Volatility

Metaldyne Performance Group has a beta of 2.07, indicating that its share price is 107% more volatile than the S&P 500. Comparatively, BorgWarner has a beta of 1.76, indicating that its share price is 76% more volatile than the S&P 500.

Profitability

This table compares Metaldyne Performance Group and BorgWarner’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Metaldyne Performance Group 2.60% 9.80% 2.11%
BorgWarner 2.06% 20.75% 8.17%

Analyst Ratings

This is a summary of current recommendations for Metaldyne Performance Group and BorgWarner, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Metaldyne Performance Group 0 2 0 0 2.00
BorgWarner 3 7 4 0 2.07

Metaldyne Performance Group presently has a consensus price target of $17.50, indicating a potential downside of 20.09%. BorgWarner has a consensus price target of $44.00, indicating a potential downside of 15.17%. Given BorgWarner’s stronger consensus rating and higher possible upside, analysts plainly believe BorgWarner is more favorable than Metaldyne Performance Group.

Institutional & Insider Ownership

18.6% of Metaldyne Performance Group shares are held by institutional investors. Comparatively, 91.1% of BorgWarner shares are held by institutional investors. 5.1% of Metaldyne Performance Group shares are held by company insiders. Comparatively, 0.7% of BorgWarner shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Metaldyne Performance Group pays an annual dividend of $0.37 per share and has a dividend yield of 1.7%. BorgWarner pays an annual dividend of $0.56 per share and has a dividend yield of 1.1%. Metaldyne Performance Group pays out 25.7% of its earnings in the form of a dividend. BorgWarner pays out 62.9% 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. Metaldyne Performance Group has increased its dividend for 2 consecutive years. Metaldyne Performance Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

BorgWarner beats Metaldyne Performance Group on 8 of the 15 factors compared between the two stocks.

About Metaldyne Performance Group

Metaldyne Performance Group Inc. provides components for use in engine, transmission and driveline (Powertrain) and chassis, suspension, steering and brake component (Safety-Critical) Platforms for the global light, commercial and industrial vehicle markets. The Company produces these components using complex metal-forming manufacturing technologies and processes for a customer base of vehicle original equipment manufacturers and Tier I suppliers. The Company operates through three segments: HHI, Metaldyne and Grede. Its metal-forming manufacturing technologies and processes include Aluminum Die Casting, Forging, Iron Casting and Powder Metal Forming, as well as value-added manufacturing processes, such as Advanced Machining and Assembly. These technologies and processes are used to create a range of customized Powertrain and Safety-Critical components that address requirements for power density, power generation, power/torque transfer, strength and noise, vibration and harshness.

About BorgWarner

BorgWarner Inc. is engaged in providing technology solutions for combustion, hybrid and electric vehicles. The Company’s segments include Engine and Drivetrain. The Engine segment’s products include turbochargers, timing devices and chains, emissions systems and thermal systems. The Engine segment develops and manufactures products for gasoline and diesel engines, and alternative powertrains. The Drivetrain segment’s products include transmission components and systems, all-wheel drive (AWD) torque transfer systems and rotating electrical devices. The Company’s products are manufactured and sold across the world, primarily to original equipment manufacturers (OEMs) of light vehicles (passenger cars, sport-utility vehicles (SUVs), vans and light trucks). The Company’s products are also sold to other OEMs of commercial vehicles (medium-duty trucks, heavy-duty trucks and buses) and off-highway vehicles (agricultural and construction machinery and marine applications.

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