Contrasting China Zenix Auto International (OTCMKTS:ZXAIY) & BorgWarner (NYSE:BWA)

BorgWarner (NYSE:BWA) and China Zenix Auto International (OTCMKTS:ZXAIY) are both consumer cyclical companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, valuation, institutional ownership, earnings, profitability, risk and analyst recommendations.

Earnings & Valuation

This table compares BorgWarner and China Zenix Auto International’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
BorgWarner	$14.20 billion	0.55	$625.00 million	$2.67	12.63
China Zenix Auto International	$271.18 million	0.20	-$61.16 million	($2.23)	-0.46

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

Institutional and Insider Ownership

95.7% of BorgWarner shares are held by institutional investors. 0.6% of BorgWarner shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility & Risk

BorgWarner has a beta of 1.3, suggesting that its stock price is 30% more volatile than the S&P 500. Comparatively, China Zenix Auto International has a beta of 2.6, suggesting that its stock price is 160% more volatile than the S&P 500.

Profitability

This table compares BorgWarner and China Zenix Auto International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
BorgWarner	3.94%	14.69%	6.42%
China Zenix Auto International	-41.87%	-40.07%	-24.13%

Analyst Ratings

This is a breakdown of current ratings for BorgWarner and China Zenix Auto International, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BorgWarner	0	7	9	0	2.56
China Zenix Auto International	0	0	0	0	N/A

BorgWarner presently has a consensus price target of $44.30, suggesting a potential upside of 31.33%. Given BorgWarner’s higher possible upside, equities research analysts clearly believe BorgWarner is more favorable than China Zenix Auto International.

Summary

BorgWarner beats China Zenix Auto International on 12 of the 13 factors compared between the two stocks.

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.

About China Zenix Auto International

China Zenix Auto International Ltd. engages in the design, manufacture, and sale of steel wheels for commercial vehicles. It operates through the following segments: PRC Aftermarket Sales, PRC OEM Sales, and International Sales. The PRC Aftermarket Sales segment produces and sells steel and aluminum wheels to distributors. The PRC OEM Sales segment produces and sells steel and aluminum wheels to vehicle manufacturers. The International Sales segment manufactures wheels to distributors and vehicle manufacturers outside China. The company was founded on July 11, 2008 and is headquartered in Zhangzhou, China.