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Magna International (TSE:MG)
TSX:MG
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Magna International
(TSX:MG)
66Neutral
Positive Factors
Capital Allocation
MGA has emerged from its elevated capex cycle and plans to return capital to shareholders, with a focus on buybacks.
Cash Flow
Magna International is in a position to support cash flow by significantly reducing capex and R&D spend, which could be a $500M+ support to free cash flow, more than offsetting potential declines in underlying EBITDA.
Share Performance
The company has seen a 10% rise in shares following a better-than-feared guidance cut in Q3 and management's positive message on capital allocation, including the resumption of buybacks.
Negative Factors
Market Exposure
Magna International is being downgraded to Sell due to its above average exposure to the European market, where weaker production is expected.
Sales Forecast
MGA expects sales to decline between 6% and 10% in 2025E due to lower production volumes and FX translation headwinds.
Vehicle Demand
Vehicle pricing remains elevated and a gradual interest rate cut makes it unlikely for vehicle demand to improve materially.
Magna International (MG) vs. S&P 500 (SPY)
Market Cap
$13.15B
Dividend Yield5.78%
Average Volume (3M)2.13M
Price to Earnings (P/E)9.7
Beta (1Y)1.29
Revenue Growth1.58%
EPS Growth-15.57%
CountryCA
Employees170,000
SectorConsumer Cyclical
Sector Strength46
IndustryAuto - Parts
Share Statistics
EPS (TTM)4.82
Shares Outstanding281,735,500
10 Day Avg. Volume1,410,021
30 Day Avg. Volume2,134,558
Financial Highlights & Ratios
PEG Ratio2.20
Price to Book (P/B)N/A
Price to Sales (P/S)0.24
Price to Cash Flow (P/CF)1.40
P/FCF Ratio2.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$64.63Price Target Upside39.82% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
Magna International Business Overview & Revenue Model
Company DescriptionMagna International Inc. designs, engineers, and manufactures components, assemblies, systems, subsystems, and modules for original equipment manufacturers of vehicles and light trucks worldwide. It operates through four segments: Body Exteriors & Structures, Power & Vision, Seating Systems, and Complete Vehicles. The Body Exteriors & Structures segment provides body and chassis, exterior, and roof systems, as well as battery enclosures and engineering and testing services, including fascia and trims, front end modules, front integration panels, liftgate modules, active aerodynamics, engineered glass, running boards, truck bed access products, and side doors. The Power & Vision segment offers hybrid and electric drive systems, motors, inverters, onboard chargers, and e-clutch; dedicated hybrid, dual and hybrid dual, and manual transmissions; AWD/4WD products and rear drive modules; transmission, engine, driveline components, engine drive plates, and accessories; engineering services; advanced driver assistance systems and sensors, and electronic control units; interior and exterior mirrors, camera and driver monitoring systems and electronics, actuators, door handles, and overhead consoles; forward, rear, and auxiliary lighting products; latching, door modules, window, power closure, and hinges and wire forming systems; and modular and textile folding roofs, and hard and soft tops. The Seating Systems segment provides seat structures, mechanism and hardware solutions, and foam and trim products. The Complete Vehicles segment offers vehicle engineering and manufacturing services. The company also designs, engineers, and manufactures tooling products. Magna International Inc. was founded in 1957 and is headquartered in Aurora, Canada.
How the Company Makes MoneyMagna International generates revenue through its extensive portfolio of automotive products and services. The company earns money by supplying a wide range of components and systems to major automotive manufacturers around the world. Its key revenue streams are derived from the sale of body exteriors and structures, powertrain systems, vision systems, seating systems, and complete vehicle assembly services. Magna leverages its global presence and partnerships with leading automotive brands to secure contracts and long-term supply agreements, which contribute significantly to its earnings. Additionally, Magna invests in research and development to innovate and improve its offerings, ensuring competitiveness in the automotive market.
Magna International Financial Statement Overview
Summary
Magna International demonstrates solid financial health characterized by steady profitability, efficient operations, and effective cash management. Despite increasing debt levels, strong equity base and cash flow generation mitigate potential risks.Income Statement
Magna International shows robust financial performance with a consistent revenue stream. The company has a steady Gross Profit Margin and Net Profit Margin, indicating efficient cost management and profitability. The revenue growth rate has been moderate, with a slight decline in recent periods. EBIT and EBITDA margins are healthy, supporting strong operational efficiency.78
Positive
Balance Sheet
The balance sheet indicates a stable financial position with a reasonable Debt-to-Equity Ratio, reflecting manageable leverage. The Return on Equity is solid, demonstrating effective utilization of equity capital. The Equity Ratio shows a strong asset base supported by equity, though there is an increase in total debt over recent periods.72
Positive
Cash Flow
The cash flow statements reveal a positive trend in Free Cash Flow, with a notable growth rate reflecting improved cash generation capabilities. The Operating Cash Flow to Net Income Ratio is strong, indicating efficient cash conversion from operations. The Free Cash Flow to Net Income Ratio further supports the company's ability to generate cash relative to its earnings.75
Positive
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 42.66B | 42.80B | 37.84B | 36.24B | 32.65B | 39.43B | Gross Profit |
| 5.74B | 5.61B | 4.65B | 5.14B | 4.44B | 5.41B | EBIT |
| 2.01B | 2.70B | 1.71B | 1.95B | 1.70B | 2.57B | EBITDA |
| 3.81B | 3.79B | 3.16B | 3.58B | 2.48B | 3.67B | Net Income Common Stockholders |
| 1.08B | 1.21B | 592.00M | 1.51B | 757.00M | 1.76B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 1.41B | 1.20B | 1.23B | 2.95B | 3.27B | 1.28B | Total Assets |
| 12.99B | 32.26B | 27.79B | 29.09B | 28.61B | 25.79B | Total Debt |
| 170.00M | 7.22B | 5.07B | 5.67B | 6.00B | 4.99B | Net Debt |
| -1.24B | 6.03B | 3.84B | 2.73B | 2.73B | 3.72B | Total Liabilities |
| 5.32B | 19.98B | 16.45B | 16.86B | 16.89B | 14.66B | Stockholders Equity |
| 7.67B | 11.88B | 10.94B | 11.84B | 11.37B | 10.83B |
| Cash Flow | Free Cash Flow | ||||
| 889.00M | 601.00M | 414.00M | 1.57B | 2.13B | 2.52B | Operating Cash Flow |
| 3.30B | 3.15B | 2.10B | 2.94B | 3.28B | 3.96B | Investing Cash Flow |
| -2.86B | -4.50B | -2.04B | -2.28B | -1.40B | -434.00M | Financing Cash Flow |
| -391.00M | 1.34B | -1.73B | -1.11B | 81.00M | -2.95B |
Magna International Technical Analysis
Negative
46.22
Price Trends
53.26
Negative
56.74
Negative
56.20
Negative
Market Momentum
-1.01
Positive
35.91
Neutral
11.09
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:MG, the sentiment is Negative. The current price of 46.22 is below the 20-day moving average (MA) of 51.24, below the 50-day MA of 53.26, and below the 200-day MA of 56.20, indicating a bearish trend. The MACD of -1.01 indicates Positive momentum. The RSI at 35.91 is Neutral, neither overbought nor oversold. The STOCH value of 11.09 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:MG.
Magna International Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Performance Comparison
TSE:MG
Magna International
46.22
-21.93
-32.18%
CAE
CAE
21.47
1.37
6.82%
WPRT
Westport Fuel Systems
2.94
-3.26
-52.58%
LIMAF
Linamar
33.50
-16.96
-33.61%
MRETF
Martinrea International
4.83
-3.47
-41.81%
TSE:NFI
NFI Group Inc
10.55
-1.51
-12.52%
Magna International Earnings Call Summary
Earnings Call Date: Feb 14, 2025 | % Change Since: -16.76% | Next Earnings Date: May 2, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mix of positive and negative elements. Notable positive aspects included strong Q4 performance, growth in China, operational improvements, and increased shareholder returns. However, these were offset by challenges such as declines in key markets, significant FX impacts, and reduced EV production expectations, leading to a cautious outlook for 2025.Highlights
Strong Q4 Performance
Q4 2024 sales increased to $10.6 billion, with a 2% weighted growth over market. EBIT margin increased 120 basis points, and adjusted EBIT rose 23%. EPS was up 27% year-over-year to $1.69, and over $1 billion in free cash flow was generated.
2024 Financial Achievements
Sales of $42.8 billion were level with 2023 despite lower volumes in North America and Europe. EBIT margin increased 20 basis points to 5.4%, and EBIT increased 4% to over $2.3 billion. Free cash flow increased by $849 million in 2024.
Growth in China
Sales in China grew by 15%, well ahead of the China market, reflecting significant exposure to fast-growing domestic OEMs.
Operational Excellence
Operational excellence activities contributed 40 basis points to margin expansion in 2024, with a further 75 basis points expected over the next two years.
Shareholder Returns
Magna returned $746 million to shareholders through dividends and share repurchases in 2024.
Lowlights
Decline in North American and European Production
North American and European production declined by 1% and 3% respectively, impacting overall sales.
Significant FX Impact
A strong U.S. dollar led to a $2 billion decline in expected sales for 2025, impacting margins.
Lowered 2025 Sales Forecast
Sales for 2025 are expected to decline due to FX headwinds, end of Jaguar programs, lower industry vehicle production, and negative program mix.
Challenges in the EV Segment
Significant pullback in EV production relative to OEM expectations led to lower equity income and commercial settlements.
Company Guidance
During the Magna International fourth quarter and year-end 2024 results and 2025 outlook call, the company provided detailed guidance on various financial metrics. For the fourth quarter of 2024, sales increased by 2% to $10.6 billion, with an EBIT margin rising by 120 basis points and adjusted EBIT growing by 23%. Earnings per share (EPS) were up 27% year-over-year to $1.69, and free cash flow exceeded $1 billion. For the full year, sales were $42.8 billion, level with 2023, despite lower volumes in North America and Europe. The EBIT margin improved by 20 basis points to 5.4%, and EBIT increased by 4%, reaching over $2.3 billion. Although EPS slightly declined compared to 2023, free cash flow saw an $849 million boost. The company anticipates challenges in 2025, including a 2% decline in weighted global vehicle production and a strong U.S. dollar impacting reported sales and earnings. However, they expect further margin contributions from operational excellence activities and restructuring actions, projecting a 5.3% to 5.8% EBIT margin in 2025, with a significant step-up expected in 2026 to 6.5% to 7.2%. Capital spending is expected to normalize to about $1.8 billion in 2025, with CapEx as a percentage of sales declining to mid-4%. Over the 2024-2026 period, Magna aims to generate approximately $3.5 billion in free cash flow.Magna International Corporate Events
Business Operations and StrategyFinancial Disclosures
Magna International Reports Q4 2024 Results and Positive Outlook for 2025
Positive
Feb 14, 2025
Magna International reported a 2% increase in sales for the fourth quarter of 2024, aligning with global light vehicle production and generating $1.9 billion in cash from operating activities. The company plans to continue its trajectory of margin expansion and cash flow generation into 2025, despite the challenges of foreign currency impacts and lower vehicle production. Magna forecasts sales for 2025 to be between $38.6 billion and $40.2 billion, with an adjusted EBIT margin of 5.3% to 5.8%. Looking ahead to 2026, Magna anticipates sales growth and an expanded EBIT margin, reflecting its strategic focus on operational efficiency and financial resilience.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.