Should You Buy BorgWarner Stock Because Its Share Count Keeps Shrinking?
BorgWarner (BWA) stock is up 55.9% over the trailing twelve months, and the business under it has been quiet. Sales grew 2.2% over the same twelve months, and profits have barely moved for three years. Shareholders have been paid anyway, because the company keeps buying back its own stock. Whether the cash keeps covering that buyback is the question.
Your Earnings Grew Faster Than BorgWarner’s Profits Did
BorgWarner retired 6.1% of its shares over the past year, and about 4.5% a year on average over the last three years. Own it, do nothing, and your claim on what the company earns keeps getting larger.
That is where the earnings growth came from. Net income has grown 0.7% a year on average over the last three years. Earnings per share grew 6.6% a year on average over the same stretch, mostly the work of the steady share retirement.
Holders have been paid for it. The stock returned 73% in price over that same three-year stretch, about 20.1% a year. Buying back stock is one driver of that return, not the only one.
Where BorgWarner Finds Four Dollars Of Cash For Every Dollar Of Profit
Over the trailing twelve months, the company spent about $650 million on buybacks and about $140 million on dividends. After stock-based compensation, that is a total shareholder yield of 5.3% of its market value. A parts maker earning a 9.9% operating margin is not the obvious source of a payout like that.
Cash is what makes it work. Operating cash flow runs at about 4.2 times reported net income, more than the thin accounting margin alone would suggest, and free cash flow covers the buyback and the dividend about 1.6 times over. The payout is not being borrowed, and net debt sits at about 1.1 times EBITDA.
That cash has a small second job as well. Management is putting an extra $10 million to $15 million into industrial research in the second half of 2026. The turbine generator launching in 2027 should bring about $300 million of revenue in its first year, on the company’s own estimate, against 2026 sales guided to $14.0 billion to $14.3 billion.
You Are Paying 33 Times Earnings While The Turbine Revenue Waits
The buyback is not the doubtful part. The board lifted the repurchase authorization to $1.35 billion in August 2026, about a tenth of the company’s market value on management’s own figures. There is room to keep going.
The price is the harder question. The stock trades at 33 times trailing earnings, against management’s 2026 adjusted EPS guide of $5.05 to $5.30. That trailing multiple is still full for a supplier guiding 2026 sales at best flat against 2025. Excluding the battery business, which shrank, its organic sales rose modestly in the second quarter of 2026 on strong transfer case volumes in North America.
Shares sit about 14% below the 52-week high of $78.82 after slipping 10.7% over the trailing three months. The buyback is a real reason to hold the stock, and it is not a reason to call the price cheap.
You are paying a full multiple for growth that has not arrived yet, and that is the part worth arguing over. Our dip-buying screen ranks the stocks that have pulled back from their own highs.
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