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Magna International (TSE:MG)
:MG

Magna International (MG) AI Stock Analysis

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Magna International

(NYSE:MG)

Rating:73Outperform
Price Target:
C$56.00
▲(9.83%Upside)
Magna International's overall stock score is driven primarily by its solid financial performance and attractive valuation, making it a stable investment in the auto parts industry. Technical analysis supports a moderately positive outlook, although macroeconomic challenges and trade impacts present risks. The company's strategic initiatives and governance are positive, reinforcing confidence in its long-term positioning.
Positive Factors
Capital Allocation
Magna has seen a 10% rise in shares following a better-than-feared guidance cut and management's positive message on capital allocation, including the resumption of buybacks.
Free Cash Flow
Magna International is in a position to support cash flow by significantly reducing capex and R&D spend, potentially adding $500M+ to free cash flow.
Tariffs
USMCA auto parts are exempt from tariffs; a significant relief vs. prior fears.
Negative Factors
European Market Exposure
Magna International is being downgraded to Sell due to its above average exposure to the European market, where weaker production is expected.
Production Volumes
MGA expects sales to decline between 6% and 10% due to lower production volumes and FX translation headwinds.
Volumes and Tariffs
There is downside risk if volumes going forward are negatively affected because of tariffs.

Magna International (MG) vs. iShares MSCI Canada ETF (EWC)

Magna International Business Overview & Revenue Model

Company DescriptionMagna International Inc. is a leading global automotive supplier, headquartered in Aurora, Ontario, Canada. The company operates in several sectors including automotive systems, assemblies, modules, and components, serving both Original Equipment Manufacturers (OEMs) and the aftermarket. Magna's core products and services encompass a wide range of vehicle systems such as body exteriors and structures, power and vision technologies, seating systems, and complete vehicle engineering and contract manufacturing.
How the Company Makes MoneyMagna International generates revenue primarily through the manufacturing and sale of automotive components and systems to major automotive OEMs worldwide. The company's key revenue streams include the production of body exteriors and structures, powertrain systems, seating systems, and complete vehicle engineering and contract manufacturing. Magna also benefits from its innovations in automotive technology, including advancements in electronics and electrification, which are increasingly in demand as the industry shifts towards electric and autonomous vehicles. Strategic partnerships and joint ventures, such as collaborations with tech companies for advanced driver-assistance systems (ADAS), also significantly contribute to Magna's earnings by expanding its technological capabilities and market reach.

Magna International Earnings Call Summary

Earnings Call Date:May 02, 2025
(Q1-2025)
|
% Change Since: 6.55%|
Next Earnings Date:Aug 01, 2025
Earnings Call Sentiment Neutral
The call reflected a mixed sentiment with strong performance in certain areas like China and collaboration with NVIDIA, but faced challenges due to tariff impacts, lower North American production, and decreased margins.
Q1-2025 Updates
Positive Updates
Ahead of Quarterly Planning Cadence
The Q1 2025 results came in ahead of the company's quarterly planning cadence, reflecting strong incremental margin on higher sales.
Return to Shareholders
Returned $187 million to shareholders in the first quarter through dividends and share repurchases.
Collaboration and Awards
Collaborated with NVIDIA for next-gen automotive technologies and won GM's Supplier of the Year and Overdrive award.
Strong Performance in China
Production assumptions in China increased due to Q1 outperformance, with production expected to reach 30.2 million units.
Solid Financial Performance
Delivered solid Q1 earnings and free cash flow better than expected, with consolidated sales at $10.1 billion.
Negative Updates
Tariff and Trade Environment Uncertainty
Increased uncertainty due to the tariff environment, impacting North American production and leading to a modest reduction in margin.
North American Production Decline
Reduced North American production by about 100,000 units due to lower vehicle production, especially affecting BES and Seating segments.
Decremental Margins on Lower Sales
Adjusted EBIT margin decreased to 3.5%, down 80 basis points from Q1 2024, due to decremental margins on lower sales.
Impact of Tariffs on Costs
Gross tariff costs estimated at $500 million, with an annualized direct tariff impact of about $250 million.
Lower Earnings and Cash Flow
Net income decreased to $219 million from $311 million in Q1 2024, with free cash flow use increasing to $313 million.
Company Guidance
During Magna International's first quarter 2025 results call, the company provided updated guidance reflecting a strong Q1 performance, with sales of $10.1 billion and an adjusted EBIT of $354 million, despite facing a challenging environment due to tariffs and foreign exchange fluctuations. The outlook included a reduction in North American production by 100,000 units to 15 million, while maintaining European production and increasing Chinese production to 30.2 million units. The company expects a higher euro and Canadian dollar for 2025, leading to an increased sales range, though partially offset by lower vehicle production in North America. Magna anticipates a modest reduction in EBIT margin due to euro-US dollar exchange impacts and decreased sales volumes. Capital spending is forecasted between $1.7 billion and $1.8 billion, with an increased tax rate of approximately 26%. The company remains focused on mitigating tariff impacts, with an expectation of recovering 100% of unmitigated incremental tariff costs from customers, while also emphasizing cost containment and capital discipline to navigate the uncertain trade environment effectively.

Magna International Financial Statement Overview

Summary
Magna International demonstrates solid financial health across all statements. The company maintains stable profitability and efficient cash flow management, with room for improvement in revenue growth and debt management. Overall, Magna is well-positioned in the auto parts industry with a strong operational framework and moderate financial leverage.
Income Statement
72
Positive
Magna International exhibits stable profitability with a Gross Profit Margin of 13.63% and a Net Profit Margin of 2.73% in TTM (Trailing-Twelve-Months). While the company has maintained a consistent revenue base, the Revenue Growth Rate shows a decline of 2.1% compared to the previous year. EBIT and EBITDA margins are healthy at 4.45% and 9.44% respectively, indicating efficient operational management despite slight pressure on margins.
Balance Sheet
68
Positive
The Balance Sheet reflects a solid equity base with an Equity Ratio of 36.60%, providing a cushion against liabilities. However, the Debt-to-Equity Ratio of 0.64 indicates moderate reliance on debt financing. Return on Equity stands at 9.76%, reflecting decent profitability given the industry conditions. The company's leverage is manageable but leaves room for improvement.
Cash Flow
75
Positive
Magna's cash flow is robust, with a Free Cash Flow to Net Income Ratio of 1.31, suggesting strong cash conversion capabilities. The Operating Cash Flow to Net Income Ratio is notably high at 3.01, indicating solid operational cash generation. Free Cash Flow Growth has been modest but stable, ensuring adequate liquidity for future investments and debt obligations.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
41.94B42.84B42.80B37.84B36.24B32.65B
Gross Profit
5.71B5.80B5.61B4.65B5.14B4.44B
EBIT
1.86B2.12B2.70B1.71B1.95B1.70B
EBITDA
3.96B3.78B3.79B3.16B3.58B2.48B
Net Income Common Stockholders
1.15B1.01B1.21B592.00M1.51B757.00M
Balance SheetCash, Cash Equivalents and Short-Term Investments
1.06B1.25B1.20B1.23B2.95B3.27B
Total Assets
32.07B31.04B32.26B27.79B29.09B28.61B
Total Debt
7.56B7.07B7.22B5.07B5.67B6.00B
Net Debt
6.50B5.82B6.03B3.84B2.73B2.73B
Total Liabilities
19.91B19.10B19.98B16.45B16.86B16.89B
Stockholders Equity
11.74B11.52B11.88B10.94B11.84B11.37B
Cash FlowFree Cash Flow
1.50B1.46B601.00M414.00M1.57B2.13B
Operating Cash Flow
3.45B3.63B3.15B2.10B2.94B3.28B
Investing Cash Flow
-2.41B-2.59B-4.50B-2.04B-2.28B-1.40B
Financing Cash Flow
-1.50B-989.00M1.34B-1.73B-1.11B81.00M

Magna International Technical Analysis

Technical Analysis Sentiment
Positive
Last Price50.99
Price Trends
50DMA
47.59
Positive
100DMA
50.62
Positive
200DMA
53.77
Negative
Market Momentum
MACD
0.57
Positive
RSI
59.17
Neutral
STOCH
68.08
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:MG, the sentiment is Positive. The current price of 50.99 is above the 20-day moving average (MA) of 50.01, above the 50-day MA of 47.59, and below the 200-day MA of 53.77, indicating a neutral trend. The MACD of 0.57 indicates Positive momentum. The RSI at 59.17 is Neutral, neither overbought nor oversold. The STOCH value of 68.08 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:MG.

Magna International Peers Comparison

Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TSXTC
79
Outperform
$255.55M9.686.86%6.17%-2.84%-8.22%
78
Outperform
C$13.60B16.1216.68%1.46%9.80%60.44%
TSMG
73
Outperform
C$14.84B9.539.85%5.16%0.36%15.87%
TSLNR
71
Outperform
$3.72B14.734.66%1.65%2.26%-54.00%
TSMRE
66
Neutral
$609.96M5.65-3.98%2.32%-9.36%-145.18%
63
Neutral
$6.96B11.512.80%3.85%2.70%-24.43%
TSNFI
59
Neutral
C$1.82B-0.03%15.99%99.83%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:MG
Magna International
52.66
-3.97
-7.01%
TSE:LNR
Linamar
64.97
-2.81
-4.14%
TSE:MRE
Martinrea International
8.55
-2.96
-25.74%
TSE:XTC
Exco Technologies
6.87
-0.66
-8.78%
TSE:CCL.A
CCL Industries (A)
77.90
4.97
6.81%
TSE:NFI
NFI Group Inc
15.31
-0.94
-5.78%

Magna International Corporate Events

Private Placements and FinancingBusiness Operations and Strategy
Magna International Announces Senior Notes Offerings to Bolster Financial Flexibility
Positive
May 14, 2025

Magna International Inc. announced the offering of Euro and U.S. dollar denominated senior notes, with the proceeds intended for general corporate purposes, including debt repayment. This strategic financial move, involving major financial institutions as joint book-running managers, is expected to enhance Magna’s financial flexibility and support its operations, potentially impacting its market positioning positively.

The most recent analyst rating on (TSE:MG) stock is a Hold with a C$48.00 price target. To see the full list of analyst forecasts on Magna International stock, see the TSE:MG Stock Forecast page.

Shareholder MeetingsBusiness Operations and Strategy
Magna International Reports 2025 Annual Meeting Outcomes
Positive
May 8, 2025

Magna International announced the results of its 2025 annual and special meeting of shareholders, where 78.66% of its common shares were represented. All 13 board nominees were elected, Deloitte was reappointed as auditor, the 2025 Stock Option Plan was ratified, and the ‘Say on Pay’ resolution was approved by a substantial majority. These results reinforce Magna’s strong governance and strategic direction, with key leadership positions confirmed for its board committees.

Business Operations and StrategyFinancial Disclosures
Magna International Reports First Quarter 2025 Financial Results
Neutral
May 2, 2025

Magna International reported a decrease in sales by 8% to $10.1 billion for the first quarter of 2025 compared to the same period in 2024, primarily due to a decline in global light vehicle production and lower complete vehicle assembly volumes. Despite the sales drop, the company’s performance exceeded expectations due to strong incremental margins and better-than-anticipated vehicle production. Magna returned $187 million to shareholders and remains focused on operational excellence and restructuring to mitigate tariff impacts and drive long-term growth.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.