BorgWarner: 3 Key Takeaways for Long-Term Investors

On its third-quarter 2026 earnings call, held on Oct. 29, 2026, BorgWarner (NYSE:BWA) raised its full-year earnings guidance. The supplier is expanding its power technology into data center markets. Management is using cash flow to buy back shares.

Three takeaways from the call highlight how management is positioning the business for growth.

1. Electric Vehicle Component Sales Outpace Sluggish Global Auto Production

Sales of eProducts, or electric and hybrid vehicle components, jumped in Europe even as global vehicle assembly slowed. Management expects this division to keep gaining market share as automakers adopt advanced hybrid technologies.

Importantly, our light vehicle eProduct sales were up 33%, primarily due to European growth.
-- Joe Fadool, Chief Executive Officer

2. Data Center Power Products Open Growth Opportunities Outside Automotive

BorgWarner is adapting its automotive electronic technology for data center energy infrastructure, including microgrid inverters, which convert direct current electricity to alternating current for local power networks. Accelerated quoting activity with major tech customers shows promising traction beyond traditional vehicles.

At the same time, we saw accelerating quoting activity. I continue to believe that our mechanical and electronic core competencies will enable us to successfully capture multiple growth vectors outside of our core automotive market.
-- Joe Fadool, Chief Executive Officer

3. Share Buybacks Drive Earnings Per Share Expansion

Heavy share repurchases continue to lift adjusted EPS, or adjusted earnings per share, which strips out one-time items. Management is directing cash flow toward stock buybacks while keeping leverage low.

Our adjusted EPS was up $0.15 or 12% compared with a year ago from lower taxes and the impact of approximately $725 million in share repurchases or approximately 6% of the company's current market capitalization over the past four quarters.
-- Craig Aaron, Executive Vice President and Chief Financial Officer

Looking Ahead

Vehicle production volumes face ongoing pressure from high interest rates, but BorgWarner is protecting profitability through strict operational cost controls. Its strong customer relationships, proprietary power electronics designs, and flexible manufacturing plants give it a structural edge as it monitors supplier inflation.

At the midpoint of this guidance, we expect to expand margins on a year-over-year basis despite a lower production environment, sales headwinds from our battery business, and a $10 million to $15 million industrial R&D investment to support our long-term profitable growth.
-- Craig Aaron, Executive Vice President and Chief Financial Officer

By pairing its core automotive business with new industrial growth opportunities, BorgWarner aims to maintain long-term earnings expansion.

Overall, I believe our year-to-date results illustrate the strength of our team, our product portfolio, and the long-term earnings power of our business.
-- Joe Fadool, Chief Executive Officer

The Motley Fool recommends BorgWarner. The Motley Fool has a disclosure policy.