Is BorgWarner, Inc. overvalued or undervalued?

As of 30 June 2025, the valuation grade for BorgWarner, Inc. has moved from expensive to very expensive, indicating a significant shift in its valuation outlook. The company appears to be overvalued, particularly when considering its P/E ratio of 8, which is notably lower than its peers such as CNH Industrial NV with a P/E of 19.42 and AGCO Corp. at 14.36. Additionally, BorgWarner's EV to EBITDA ratio stands at 5.44, which is higher than the industry average, suggesting that the market may be pricing in excessive growth expectations.
In terms of performance, BorgWarner's stock has returned 39.79% year-to-date, significantly outperforming the S&P 500's 12.22% during the same period. However, over a three-year horizon, BorgWarner's return of 36.62% pales in comparison to the S&P 500's impressive 70.41%. This disparity further emphasizes the company's overvaluation relative to its growth prospects and peer performance.