Critical Comparison: BorgWarner (NYSE:BWA) and Federal Screw Works (OTCMKTS:FSCR)

Federal Screw Works (OTCMKTS:FSCR) and BorgWarner (NYSE:BWA) are both auto/tires/trucks companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, valuation, analyst recommendations, dividends, institutional ownership, risk and earnings.

Insider and Institutional Ownership

95.7% of BorgWarner shares are held by institutional investors. 46.2% of Federal Screw Works shares are held by company insiders. Comparatively, 0.6% of BorgWarner shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Federal Screw Works and BorgWarner’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Federal Screw Works	1.36%	N/A	N/A
BorgWarner	0.94%	16.72%	7.02%

Volatility & Risk

Federal Screw Works has a beta of 1.13, meaning that its share price is 13% more volatile than the S&P 500. Comparatively, BorgWarner has a beta of 1.06, meaning that its share price is 6% more volatile than the S&P 500.

Valuation & Earnings

This table compares Federal Screw Works and BorgWarner”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Federal Screw Works	$97.55 million	0.12	$1.62 million	$0.98	8.67
BorgWarner	$14.09 billion	0.66	$338.00 million	$0.63	68.55

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

Analyst Ratings

This is a breakdown of recent ratings and price targets for Federal Screw Works and BorgWarner, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Federal Screw Works	0	0	0	0	0.00
BorgWarner	0	6	10	1	2.71

BorgWarner has a consensus target price of $46.08, indicating a potential upside of 6.70%. Given BorgWarner’s stronger consensus rating and higher probable upside, analysts plainly believe BorgWarner is more favorable than Federal Screw Works.

Summary

BorgWarner beats Federal Screw Works on 11 of the 15 factors compared between the two stocks.

About Federal Screw Works

Federal Screw Works manufactures and sells industrial component parts primarily to the automobile industry in the United States. It operates through Big Rapids, Romulus, Traverse City, and Novex Tool divisions. The company offers cold formed and machined pins, including piston pins, planetary and differential gear shafts, and oil pump and steering shafts for the automotive, refrigeration, and small engine industries; and cold formed machined products, such as suspension ball studs, fluid line adapters, and precision formed and machined valve lifter bodies to the automotive industry. It also provides close tolerance machined products that are used in transmission valves, ball joints, steering gear bulkhead assemblies, torque converter hubs, and piston pins; and engineered nut products comprising prevailing torque nuts, free spinning nuts, slotted nuts, nut retainer assemblies, and nut washer assemblies to the automotive industry. In addition, the company offers cold form tooling products, which include assemblies, sleeves, dies, and punches; and complex cold formed parts, such as tie rod housings, valve lifter bodies, and suspension components. Federal Screw Works was founded in 1917 and is based in Romulus, Michigan.

About BorgWarner

BorgWarner Inc., together with its subsidiaries, provides solutions for combustion, hybrid, and electric vehicles worldwide. It offers turbochargers, eBoosters, eTurbos, timing systems, emissions systems, thermal systems, gasoline ignition technology, smart remote actuators, powertrain sensors, cabin heaters, battery modules and systems, battery heaters, and battery charging. The company provides power electronics, control modules, software, friction, and mechanical products for automatic transmissions and torque-management products. It sells its products to original equipment manufacturers of light vehicles, which comprise passenger cars, sport-utility vehicles, vans, and light trucks; commercial vehicles, including medium-duty and heavy-duty trucks, and buses; and off-highway vehicles, such as agricultural and construction machinery, and marine applications, as well as to tier one vehicle systems suppliers and the aftermarket for light, commercial, and off-highway vehicles. The company was formerly known as Borg-Warner Automotive, Inc. BorgWarner Inc. was incorporated in 1987 and is headquartered in Auburn Hills, Michigan.