Magna International (NYSE:MGA) shares slumped in the early session today after the automotive supplier’s fourth-quarter results failed to surpass estimates. Despite a year-over-year increase of 9.2%, revenue of $10.45 billion lagged expectations by a narrow margin of $20 million. Further, EPS of $1.33 landed short of estimates by $0.13.
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The uptick in Magna’s top line was driven primarily by higher global production and the launch of new programs. During the quarter, light vehicle production increased by 12% in China and by 7% in Europe. In North America, production increased by 5% despite the negative impact of labor strikes on some of Magna’s customers.
A focus on productivity and efficiency improvements helped the company increase its adjusted EBIT to $558 million from $367 million in the year-ago period. The company has increased its fourth-quarter dividend by 3% to $0.475 per share. The MGA dividend is payable on March 8 to investors of record on February 23.
For Fiscal Year 2024, Magna expects total sales in the range of $43.8 billion to $45.4 billion. Adjusted net income for the year is anticipated between $1.6 billion and $1.8 billion. For Fiscal Year 2026, the company foresees total sales in the range of $48.8 billion to $51.2 billion. Notably, the company expects adjusted EBIT margin to expand by 180 basis points or more to a range of 7% to 7.7% in 2026.
Is MGA a Good Stock to Buy?
Overall, the Street has a Moderate Buy consensus rating on Magna International. Following a nearly 14% rise in the company’s share price over the past three months, the average MGA price target of $64.52 points to a modest 9.95% potential upside in the stock.
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