BWA vs THRM: Which Is the Better Buy in 2026?
Last updated October 2026
Short answer
BWA is the larger of the two ($12.40B market cap): the incumbent the market prices for continued execution (10.25x forward earnings, beta 1.10). THRM is the smaller challenger ($962.13M), priced similarly on forward earnings (9.66x): more room to run, but more to prove. The real question is which set of drivers you believe, and whether owning one (or both) leaves you over-concentrated.
BWA vs THRM: the tie-breaker metrics
Same yardstick, side by side (as of October 2026). Valuation lined up like this is most meaningful for two names in the same corner of the market, which these are. Figures are approximate; verify before investing.
| Metric | BWA | THRM | What it tells you |
|---|---|---|---|
| Market cap | $12.40B | $962.13M | Size. The larger name is the incumbent; the smaller has more room to grow and more to prove. |
| Forward P/E | 10.25 | 9.66 | Valuation on next year's expected earnings, the same yardstick for both. Lower is cheaper for that growth; higher means the market is paying up. |
| Trailing P/E | 30.00 | 39.12 | Valuation on the last 12 months. A big drop from trailing to forward means the market expects earnings to jump, so more growth is already in the price. |
| Beta | 1.10 | 1.34 | Volatility vs the market. Above 1 swings harder than the index; below 1 is steadier. Higher beta means bigger drawdowns to hold through. |
| Price vs 52-week range | 53% of range | 20% of range | Where today's price sits between the 52-week low and high. Near the high is momentum with less margin of safety; near the low is out of favor or a discount, depending on why. |
| Price / book | 2.21 | 1.33 | How much you pay over book value. Very high can signal an asset-light, high-return business or a rich price. |
Before you buy: how BWA and THRM affect your concentration
The metrics above tell you which is the marginally better business. The bigger risk for most people is not picking the slightly worse stock, it is over-concentrating. BWA and THRM share themes, so owning both, or adding either to what you already hold, can quietly push a large share of your portfolio into one bet.
This is the part a generic comparison page cannot answer, because it depends on what you own. Connect your brokerage and Walnut shows your real, combined BWA and THRM exposure, flags overlap with your existing positions, and tells you if adding one would tip you past a concentration you are comfortable with, read-only by default, with your login staying at your broker. Walnut is not an investment adviser.
What does BorgWarner (BWA) do?
BorgWarner makes the parts between an engine or a battery and the wheels. Four reportable segments carry the business: Turbos & Thermal Technologies (~$1.44 billion of second-quarter 2026 sales), Drivetrain & Morse Systems (~$1.45 billion), PowerDrive Systems (~$658 million) and Battery Energy Systems (~$100 million). Split a different way, management separates Foundational products, which touch internal combustion and hybrid powertrains, from eProducts, which touch electric ones. Foundational was ~$2.99 billion of the ~$3.65 billion quarter and eProducts ~$663 million, so roughly four fifths of revenue still rides on engines. Geographically the business is genuinely global rather than American: first-half 2026 sales split ~$2.65 billion Europe, ~$2.29 billion Asia and ~$2.07 billion North America. Customers are vehicle OEMs, which means BorgWarner's volumes are set by other people's production schedules.
What does Gentherm Incorporated (THRM) do?
Gentherm Incorporated, based in Novi, Michigan, designs and makes thermal and pneumatic comfort products. Its core business is automotive climate and comfort: Climate Control Seats (heated, ventilated and cooled seats) generated about $218 million of the company's record ~$416 million of product revenue in Q2 2026, alongside steering wheel heaters, battery thermal products, lumbar and massage systems, and a small medical patient temperature management unit (~$11 million a quarter). On October 1, 2026 it completed a Reverse Morris Trust combination with Modine Manufacturing's Performance Technologies business (about $1.1 billion of revenue), which adds engine and battery cooling, radiators and coolers for commercial vehicles, off-highway equipment and power generation. Former Modine holders own roughly 43.6% of the combined company.
BWA vs THRM: how do they differ?
Both fit overlapping themes, but they are not interchangeable. The useful comparison is which set of drivers and risks you want exposure to.
- BWA drivers: Margin repair without volume growth; Turbos and drivetrain remain the cash engine.
- THRM drivers: Modine Performance Technologies integration; Seat comfort content growth.
Which fits which kind of investor
A faster-growing, richer-valued name usually swings harder, so it suits a longer horizon and a higher tolerance for volatility; a steadier, more cash-generative business suits a more conservative or income-minded investor. The honest test is which set of risks you could hold through a drawdown: Auto suppliers do not control their own volumes, and BorgWarner's revenue is set by OEM build schedules that can be cut with little notice. For THRM, integration is the largest new risk: combining two engineering and manufacturing organizations across many countries can disrupt customers and delay synergies.
BWA or THRM: which should you pick?
Growth-minded investors who believe the theme has years to run tend to accept the richer multiple for more upside; value-minded investors lean toward the cheaper forward earnings and steadier profile. Pick BWA if you believe its drivers more; THRM if you believe its. Many investors hold both, but since they share themes, that is a concentrated bet, not diversification. Decide deliberately and check overlap. For the full detail, see the BWA and THRM guides.
BWA vs THRM: the full fundamentals
BWA. Headline valuation looks contradictory: a ~35x trailing GAAP price-to-earnings ratio against a ~$14.1 billion market capitalization sits beside guidance that implies roughly a mid-teens multiple on adjusted earnings. Reconciling the two comes down to 2025 charges, including ~$42 million of impairments and ~$32 million of costs to exit the charging business, which depressed the trailing base without reflecting current run-rate profitability. Free cash flow near ~$1.19 billion, or roughly 8% of sales, is arguably the cleaner read on what the business earns.
THRM. Standalone figures exclude Modine Performance Technologies, which closed on October 1, 2026, so trailing ratios will shift sharply once combined results are reported. Against management's ~$322 million pro forma adjusted EBITDA (including synergies), the market value implies a low single digit to mid single digit EBITDA multiple before debt, a discount that reflects auto and truck cyclicality and integration uncertainty. On the balance sheet, standalone Gentherm ended June 2026 with $273 million of debt, $213 million of cash, net leverage of about 0.3x and $502 million of liquidity. At closing, the spun-off business borrowed $250 million under a delayed-draw term loan administered by Bank of America, priced at SOFR plus 1.125% to 2.0% depending on leverage, which now sits inside the combined company, and the special dividend paid out about $63.5 million. Share count rose to roughly 54.4 million after 23.7 million new shares went to Modine holders.
Headline figures (approximate, August 2026): BWA shows revenue (ttm) ~$14.34B, net income (ttm) ~$415M, gaap eps (ttm) ~$2.00, 2026 adjusted eps guidance ~$5.05 to ~$5.30; THRM shows revenue (ttm, standalone) ~$1.55B, 2026 revenue guidance (standalone) ~$1.55B to $1.65B, pro forma combined revenue ~$2.6B, q2 2026 adjusted eps ~$0.75.
The bottom line: BWA vs THRM
BWA and THRM are related but distinct: same themes, different businesses and risks. Neither wins in the abstract; the right pick is whichever thesis you actually believe, sized so you are not over-concentrated in one theme. Walnut can show your combined BWA and THRM exposure against your real portfolio. It is not an investment adviser.
Wondering how BWA or THRM fits the portfolio you already own? Walnut is an AI investing app that connects your brokerage read-only and answers questions like that about your actual holdings: overlap, concentration, and how each position tracks the S&P 500. Compare the best AI portfolio analyzers or see the best AI investing apps in 2026.
Investing in BorgWarner with AI
Connect the broker you already use and ask Walnut's AI how BWA fits what you actually hold: whether you own it already through a fund, what it would do to your concentration, and how it has tracked the S&P 500. Read-only by default, and you approve anything before it reaches your broker.
FAQ
What is the difference between BWA and THRM?
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BorgWarner makes the parts between an engine or a battery and the wheels. Gentherm Incorporated, based in Novi, Michigan, designs and makes thermal and pneumatic comfort products. They show up together because they share investment themes, but they are different businesses, so the better fit depends on which thesis you are expressing.
Is BWA or THRM the better stock?
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Neither is universally better. BWA is the larger incumbent; THRM is the smaller challenger and looks cheaper on forward earnings. Walnut is informational, not investment advice. Compare what each does, the tie-breaker metrics above, and the risks, then decide which fits your thesis and what you already own.
Which is cheaper, BWA or THRM?
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On forward P/E (as of October 2026), BWA trades at 10.25x and THRM at 9.66x, so THRM is the cheaper of the two on next year's expected earnings. A lower multiple is not automatically the better buy: a richer valuation can be justified by faster growth, and a lower one can reflect real risk. Weigh the multiple against how fast each business is compounding.
Should you own both BWA and THRM?
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Because they share themes, owning both concentrates you in that theme. That can be intentional (a focused bet) or accidental (less diversification than it looks). Walnut can show your combined exposure across both, and whether adding either over-concentrates you, before you buy.
What are the risks of BWA vs THRM?
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BWA: Auto suppliers do not control their own volumes, and BorgWarner's revenue is set by OEM build schedules that can be cut with little notice. Tariff policy and regional trade friction matter unusually here because roughly ~$2.65 billion of first-half sales came from Europe and ~$2.29 billion from Asia, so cost pass-through negotiations with customers are a recurring drag on margin. Electrification timing cuts both ways: a faster transition strands foundational capacity, while a slower one leaves the ~$1.26 billion eProducts book underutilized against the capital already spent on it. On legal matters, the company and its predecessors have been named potentially responsible parties at 16 Superfund or equivalent sites as of June 30, 2026, carrying a ~$5 million environmental accrual covering four of them, and the June 2026 10-Q reports the ordinary course of warranty, intellectual property and governmental claims without identifying any matter management considers reasonably likely to be material. A separate dispute with PHINIA, the 2023 spin-off, over roughly ~$120 million of value added tax refunds was settled in October 2025 for ~$78 million payable to BorgWarner, of which about ~$23 million remained receivable at mid-2026. No securities fraud class action appears in the company's current legal proceedings disclosure. THRM: Integration is the largest new risk: combining two engineering and manufacturing organizations across many countries can disrupt customers and delay synergies. The legacy business is tied to light vehicle production, which management assumes will fall at a low single digit rate in 2026, and the acquired business adds exposure to the cyclical commercial truck and off-highway markets. Tariffs and trade policy affect a footprint spread across Mexico, Europe and Asia, and gross margin slipped to about 23.2% in Q2 2026 from 23.9% a year earlier. Customer concentration among large automakers and competition from bigger seat and thermal suppliers can pressure pricing. Customer concentration is high: Lear and Adient, which build complete seats, bought $234 million and $164 million of product in 2025 (16% and 11% of product revenue), and products ending up in General Motors and Volkswagen vehicles each represented 12%. About 36% of the workforce belongs to unions or works councils, and roughly 1,300 employees were based in Ukraine at the end of 2025. Medical carries goodwill whose estimated fair value exceeded carrying value by only about 25% at year-end 2025, a margin the company flagged as at risk in future impairment tests. Cash generation was soft in Q2 2026, with operating cash flow of $2.3 million versus $31.7 million a year earlier because of restructuring and merger costs, and Performance Technologies' gross margin fell 390 basis points to 16.5% in Modine's March quarter on material costs and tariffs.
Walnut is informational, not investment advice. This page is descriptive and not a recommendation to buy or sell BWA or THRM; figures are approximate and dated (as of October 2026). Verify current data before investing.