Magna Posts Better-Than-Expected 1Q Results, Profit More Than Doubles

Magna International (MG) beat earnings and revenue estimates in its first quarter, fueled by strong demand for car structures in China.

Magna’s total revenue for 1Q 2021 came in at $10.18 billion, an increase of 17.5% from a revenue of $8.66 billion reported in 1Q 2020. In addition, it beat estimates of $9.53 billion. The rise in sales came as global light vehicle production rose 18%, thanks to an 87% increase in China.

Meanwhile, the Canadian auto parts maker reported a profit of $615 million ($2.03 per diluted share) in 1Q 2021, up 136% from $261 million ($0.86 per diluted share) in 1Q 2020. A strong recovery in the global automotive sector and massive growth in the Chinese market boosted profit.

On an adjusted basis, Magna earned $1.86 per share for its most recent quarter compared with an adjusted profit of $0.86 per share in the prior-year period. Adjusted profit was higher than analysts’ expectations of $1.57.

Magna’s CEO Swamy Kotagiri said, “We generated strong earnings in the first quarter of 2021 despite industry supply constraints that impacted OEM production schedules. We expect supply constraints to continue through at least the second quarter. As we look past the near-term industry headwinds, we see considerable growth opportunities for Magna in the coming years.”

Magna slightly raised its full-year revenue forecast of $40.2 billion to $41.8 billion, compared to its earlier revenue expectations of between $40.0 billion to $41.6 billion. (See Magna International stock analysis on TipRanks)

Last week, BMO Capital analyst Peter Sklar reiterated a Buy rating on MG with a price target of $99.00 (C$121.31) for a 3.3% upside potential.

Overall, MG scores a Strong Buy consensus rating among analysts based on 9 Buys and 3 Holds. The average analyst price target of C$128.67 implies a 9.6% upside potential to current levels.

On top of that, Magna scores a 9 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform the overall market. Shares have risen by approximately 30% year-to-date.