BorgWarner (BWA) opened Q1 2026 with total revenue of US$3.5 billion and basic EPS of US$1.18, setting a clearer earnings picture after a run of mixed quarterly figures that included a Q4 2025 loss. Over the last five reported quarters, revenue has moved in a tight band between US$3.4 billion and US$3.6 billion, while quarterly basic EPS has ranged from a loss of US$1.84 in Q4 2024 to a high of US$1.18 in the latest quarter. The key question for you is how durable these margins look as management works past prior one off hits.

See our full analysis for BorgWarner.

With the latest numbers on the table, the next step is to stack them against the widely followed BorgWarner narratives to see which storylines hold up and which ones the fresh margin profile starts to challenge.

Margins Steady Around 2.5% Net

• On a trailing basis, BorgWarner reported US$14.3b in revenue and US$362 million in net income excluding extra items, giving a 2.5% net margin compared with 2.2% a year earlier.
• Consensus narrative talks about higher profitability as electrified products scale, and this margin shift sits alongside:
  • One year earnings growth of 16.4%, which fits the view that earnings are improving faster than revenue, even though revenue growth is forecast at 4.1% a year versus 11.3% for the wider US market.
  • A large US$772.0 million one off loss still affecting the trailing numbers, which keeps the margin level modest and highlights that cleaner profitability will need to show up without such hits.

Volatile EPS With One Off Losses

• Quarterly basic EPS has moved from a loss of US$1.84 in Q4 2024 to US$1.18 in Q1 2026, with trailing 12 month EPS at US$1.71 and a US$772.0 million one off loss embedded in that period.
• Bears argue that heavy reliance on projects like the turbine generator system and exposure to weaker Battery & Charging Systems could pressure results, and the recent EPS pattern shows:
  • Two loss making quarters in Q4 2024 and Q4 2025, with net income excluding extra items at a loss of US$403 million and US$262 million respectively, underlining how earnings can be hit when segments struggle or charges are taken.
  • Positive quarters such as Q2 and Q3 2025, with net income excluding extra items of US$224 million and US$158 million, which challenge the idea that earnings are structurally weak but still leave questions about consistency when some businesses face headwinds.

On a quarter like this, where EPS returns to positive territory after recent losses, skeptics focus on how repeatable that improvement really is before getting comfortable with the story behind it. 🐻 BorgWarner Bear Case

Rich P/E Versus DCF Fair Value

• At a share price of US$59.41 and a trailing P/E of 33.8x, valuation screens as higher than peer and industry averages around 18x, while a DCF fair value in the data of US$99.88 suggests a large gap to that model output.
• Bullish investors often point to earnings growth and that DCF fair value as support, yet the numbers indicate a more balanced picture:
  • Forecast EPS growth of about 16.4% a year and trailing earnings growth of 16.4% support the idea that profit growth could justify a premium multiple if it is sustained.
  • The combination of a high reported P/E and the one off US$772.0 million loss inside the trailing period means some of that premium is based on earnings that still carry unusual items, so you need to be comfortable with how quickly cleaner EPS might filter through.

If you want to see how optimistic investors are building a case around these growth and valuation figures, take a closer look at the bullish narrative next. 🐂 BorgWarner Bull Case

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for BorgWarner on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Seeing both risks and rewards in the story so far? Take a moment to review the numbers yourself, weigh the trade offs, and then check the 3 key rewards and 2 important warning signs

Explore Alternatives

BorgWarner's mixed earnings pattern, modest 2.5% net margin, and reliance on quarters affected by one off losses leave questions about consistency and quality of profitability.

If this patchy margin record and volatile EPS make you cautious, you may wish to widen your search right now using the 74 resilient stocks with low risk scores to focus on companies with steadier financial profiles.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.