Is BorgWarner, Inc. overvalued or undervalued?

As of 7 November 2025, the valuation grade for BorgWarner, Inc. has moved from fair to very expensive, indicating that the stock is overvalued. The company has a P/E ratio of 8, which is significantly lower than its peers such as CNH Industrial NV with a P/E of 19.42 and AGCO Corp. at 14.36, suggesting that while BorgWarner may appear cheaper on a P/E basis, it is still considered overvalued relative to its industry. Additionally, the EV to EBITDA ratio stands at 5.44, compared to the industry average of around 10.28 for CNH Industrial, further reinforcing the overvaluation perspective.
Despite recent stock performance showing a return of 42.25% year-to-date compared to the S&P 500's 14.40%, the long-term outlook remains concerning as BorgWarner's 3-year and 5-year returns of 25.48% and 32.50% respectively lag behind the S&P 500's 76.76% and 91.73%. This divergence suggests that while the stock has performed well recently, it may not be sustainable given its current valuation metrics.