BorgWarner (NYSE: BWA) and Fox Factory Holding Corp. (NASDAQ:FOXF) are both auto/tires/trucks companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, profitability, earnings and analyst recommendations.

Profitability

This table compares BorgWarner and Fox Factory Holding Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BorgWarner 2.06% 20.75% 8.17%
Fox Factory Holding Corp. 10.67% 29.60% 16.67%

Dividends

BorgWarner pays an annual dividend of $0.56 per share and has a dividend yield of 1.3%. Fox Factory Holding Corp. does not pay a dividend. BorgWarner pays out 62.9% of its earnings in the form of a dividend. BorgWarner has increased its dividend for 2 consecutive years.

Valuation & Earnings

This table compares BorgWarner and Fox Factory Holding Corp.’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
BorgWarner $9.27 billion 1.01 $1.54 billion $0.89 49.82
Fox Factory Holding Corp. $447.71 million 3.15 $74.45 million $1.24 30.40

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

Analyst Recommendations

This is a breakdown of current ratings for BorgWarner and Fox Factory Holding Corp., as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BorgWarner 3 8 4 0 2.07
Fox Factory Holding Corp. 0 5 1 0 2.17

BorgWarner currently has a consensus target price of $42.14, indicating a potential downside of 4.96%. Fox Factory Holding Corp. has a consensus target price of $34.00, indicating a potential downside of 9.81%. Given BorgWarner’s higher probable upside, analysts plainly believe BorgWarner is more favorable than Fox Factory Holding Corp..

Volatility & Risk

BorgWarner has a beta of 1.73, suggesting that its share price is 73% more volatile than the S&P 500. Comparatively, Fox Factory Holding Corp. has a beta of 0.69, suggesting that its share price is 31% less volatile than the S&P 500.

Institutional and Insider Ownership

92.4% of BorgWarner shares are held by institutional investors. Comparatively, 96.7% of Fox Factory Holding Corp. shares are held by institutional investors. 0.7% of BorgWarner shares are held by insiders. Comparatively, 21.4% of Fox Factory Holding Corp. shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Fox Factory Holding Corp. beats BorgWarner on 10 of the 17 factors compared between the two stocks.

BorgWarner Company Profile

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.

Fox Factory Holding Corp. Company Profile

Fox Factory Holding Corp. is engaged in the manufacturing, sale and service of ride dynamics products. The Company’s products fall into two categories: bikes, and powered vehicles, including side-by-sides, on-road vehicles with off-road capabilities, off-road vehicles and trucks, all-terrain vehicles (ATVs), snowmobiles, specialty vehicles and applications, and motorcycles. The Company’s brands include FOX, FOX RACING SHOX and RACE FACE. The Company’s products include 34 Factory Series FLOAT FIT4, which provides external adjustability with its fourth-generation FOX Isolated Technology and closed-cartridge damper, and includes a self-adjusting negative chamber air spring; X2 technology, utilized in its Factory Series FLOAT and DH rear shocks; PODIUM Internal Bypass, and X2 technology utilized in its 2.5 PODIUM shocks for side-by-sides that feature high and low speed rebound adjustment, high and low speed compression adjustment, and a dual-rate spring for the rear shocks.

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