Head to Head Comparison: BorgWarner (NYSE:BWA) & Garrett Motion (NASDAQ:GTX)

Garrett Motion (NASDAQ:GTX – Get Free Report) and BorgWarner (NYSE:BWA – Get Free Report) are both consumer discretionary companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, earnings, risk, dividends, profitability and analyst recommendations.

Valuation & Earnings

This table compares Garrett Motion and BorgWarner”s revenue, earnings per share and valuation.

Garrett Motion has higher earnings, but lower revenue than BorgWarner. Garrett Motion is trading at a lower price-to-earnings ratio than BorgWarner, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

86.3% of Garrett Motion shares are owned by institutional investors. Comparatively, 95.7% of BorgWarner shares are owned by institutional investors. 1.1% of Garrett Motion shares are owned by company insiders. Comparatively, 0.8% of BorgWarner shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Volatility & Risk

Garrett Motion has a beta of 0.95, meaning that its share price is 5% less volatile than the S&P 500. Comparatively, BorgWarner has a beta of 1.2, meaning that its share price is 20% more volatile than the S&P 500.

Dividends

Garrett Motion pays an annual dividend of $0.32 per share and has a dividend yield of 1.5%. BorgWarner pays an annual dividend of $0.68 per share and has a dividend yield of 1.3%. Garrett Motion pays out 16.4% of its earnings in the form of a dividend. BorgWarner pays out 28.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. BorgWarner has increased its dividend for 1 consecutive years. Garrett Motion is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Garrett Motion and BorgWarner’s net margins, return on equity and return on assets.

Analyst Recommendations

This is a summary of current ratings for Garrett Motion and BorgWarner, as reported by MarketBeat.com.

Garrett Motion currently has a consensus target price of $37.00, suggesting a potential upside of 78.92%. BorgWarner has a consensus target price of $79.00, suggesting a potential upside of 56.36%. Given Garrett Motion’s higher possible upside, equities analysts clearly believe Garrett Motion is more favorable than BorgWarner.

Summary

BorgWarner beats Garrett Motion on 9 of the 17 factors compared between the two stocks.

About Garrett Motion

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Garrett Motion designs and manufactures automotive technologies focused on improving vehicle performance, fuel efficiency and emissions. Its products include turbochargers for passenger vehicles and commercial vehicles, along with electric boosting technologies that support conventional, hybrid and electric powertrains. The company also develops technologies for zero-emission applications, including compressors for hydrogen fuel-cell systems. Its products and engineering services are used by automakers and commercial-vehicle manufacturers around the world.

About BorgWarner

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BorgWarner Inc. is a global automotive supplier that develops and manufactures technologies for passenger vehicles, commercial vehicles and other applications. Its products support vehicles powered by internal combustion engines as well as hybrid and electric vehicles. The company’s offerings include turbocharging systems, transmission components, electric motors, power electronics, battery and thermal-management systems, and technologies that help control emissions. BorgWarner supplies automakers and commercial-vehicle manufacturers around the world, with operations serving markets across North America, Europe and Asia.