Q4 Earnings Beat, Management Guides Low

After a weak open, BWA surged 3.4% day after releasing their Q4 2011 results, and eventually closed 0.71% up at $79.41. Earnings per share climbed 34% for the quarter to $1.19, and beat analyst estimates by $0.02. However, revenue came in below forecasts, up 16%. Management gave guidance for 2012, expecting 10% to 12% year-over-year sales growth, earnings per share of $5.35 to $5.65 and operating income margin of 11.5%. CEO Manganello cited new business growth and adoption of their leading-edge powertrain technology as key drivers to fourth-quarter results and full year.

BWA is currently trading at a P/E’ of 12.4x and an EV/IC’ 2.4x, as the market appears to be pricing in 11% ROI’ with 8% IC’ Growth over the next 5 years. This compares to consensus driven ROI’ of 17% and 18% for 2011 and 2012, respectively, implying market expectations may be low.

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