Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of BorgWarner Are Up Today

By John Rosevear - Apr 6, 2020 at 1:01PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The closer we get to reopening auto plants, the better for BorgWarner.

What happened

Shares of auto-industry supplier BorgWarner (BWA 2.10%) were rising on Monday amid a broad-based rally as investors saw signs that the economic impact of the coronavirus pandemic might not be quite as severe as feared. 

As of 1:30 p.m. EDT today, BorgWarner's shares were up about 14.5% from Friday's closing price. 

BorgWarner's headquarters building in Auburn Hills, Michigan.

Image source: BorgWarner.

So what

As auto investors know, the prospects (and stock prices) of big auto suppliers like BorgWarner tend to rise and fall with those of the overall auto industry. Right now, with most automakers' factories in the U.S. and Europe shut down due to the COVID-19 pandemic, BorgWarner isn't shipping many parts, and it isn't generating much revenue.

That's not good, obviously, and it's most of the reason the company's share price has fallen over 40% since Jan. 1. 

BWA Chart

BWA data by YCharts.

But if the strict social-distancing measures in place in most U.S. states and Canada are starting to bring the pandemic under control, then it's possible that things will be back to "normal" before the end of the year.

A less-bad-than-feared economy also makes it more likely that BorgWarner's acquisition of rival Delphi Technologies (DLPH) -- which was called into question last week after Delphi drew down its line of credit without asking BorgWarner first -- will proceed. And that would be good news for both companies' stocks.

Now what 

Investors will have to wait a few more weeks for a full update from BorgWarner's management. The company is scheduled to report its first-quarter earnings before the market opens on May 6. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

BorgWarner Inc. Stock Quote
BorgWarner Inc.
$34.07 (2.10%) $0.70
Delphi Technologies PLC Stock Quote
Delphi Technologies PLC

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/02/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.