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Magna International (TSE:MG)
TSX:MG
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Magna International
(TSX:MG)
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Rating:66Neutral
Price Target:
C$101.00
▲(19.57% Upside)
Action:DowngradedDate:02/18/26
The score is driven by solid financial health and cash generation plus a supportive 2026 outlook (margin expansion, strong free cash flow, buybacks). Offsetting these positives are weaker recent profitability trends, rising 2025 debt, and a notably overbought technical setup that increases near-term downside risk; valuation is reasonable but not especially cheap at ~22.8x earnings.
Positive Factors
Strong cash generation
Sustained ~ $3.6B operating cash flow and materially positive free cash flow provide durable internal funding for capex, dividends, buybacks and deleveraging. This lessens reliance on external financing and supports capital allocation through automotive cycles.
Margin expansion via operational excellence
Consecutive margin gains and a company-wide digital architecture indicate structural cost and productivity improvements. Expected additional operational benefit in 2026 supports margin durability and helps offset cyclical volume pressure over the medium term.
Solid liquidity and disciplined capital allocation
Sizeable liquidity and a clear deleveraging target give management flexibility to fund transitions (EV, ADAS) while continuing buybacks and modest dividend growth. That balance sustains shareholder returns and reduces financing risk across cycles.
Negative Factors
Muted top-line growth
Flat revenue growth limits operating leverage and constrains long-term earnings upside, making profit improvement reliant on cost initiatives and mix shifts rather than secular demand gains. This increases sensitivity to program roll-offs and OEM production volatility.
Rising debt and leverage pressure
An increase in total debt and leverage near 1.6x reduces financial cushion and narrows room for opportunistic investments. If cash generation weakens or costs rise, higher debt can constrain strategic moves and elevate refinancing or covenant risk in a cyclical industry.
Discrete P&V warranty/recall headwinds
Ongoing warranty settlements and recall remediation create recurring cost and reputational risk in Power & Vision. These discrete but material issues can pressure margins, increase capital tied to remediation, and complicate customer negotiations over the medium term.
Magna International (MG) vs. iShares MSCI Canada ETF (EWC)
Market Cap
$23.80B
Dividend Yield3.69%
Average Volume (3M)1.80M
Price to Earnings (P/E)20.6
Beta (1Y)1.31
Revenue Growth0.66%
EPS Growth-0.61%
CountryCA
Employees167,000
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Parts
Share Statistics
EPS (TTM)2.97
Shares Outstanding281,814,270
10 Day Avg. Volume2,112,910
30 Day Avg. Volume1,798,777
Financial Highlights & Ratios
PEG Ratio-1.18
Price to Book (P/B)1.20
Price to Sales (P/S)0.35
P/FCF Ratio8.26
Enterprise Value/Market Cap1.02
Enterprise Value/Revenue0.57
Enterprise Value/Gross Profit4.33
Enterprise Value/Ebitda6.31
Forecast
1Y Price Target
$91.26Price Target Upside8.03% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering14
EPS Forecast (FY)9.27
Revenue Forecast (FY)$58.05B
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 primarily through the manufacturing and sale of automotive parts and systems to original equipment manufacturers (OEMs) and the aftermarket. Its revenue model is diversified across several key segments, including Body Exteriors and Structures, Power and Vision, and Seating Systems. The company earns money by supplying components such as vehicle body structures, mirrors, and seating systems, often under long-term contracts with major automotive brands. Additionally, Magna benefits from economies of scale and operational efficiencies, allowing it to maintain competitive pricing. Strategic partnerships with leading automotive manufacturers and investments in electric vehicle technologies and autonomous driving systems further enhance its revenue potential. The company's focus on innovation and sustainability also positions it well to capitalize on emerging market trends, contributing to its overall earnings.
Magna International Earnings Call Summary
Earnings Call Date:Feb 13, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 01, 2026
Earnings Call Sentiment Positive
The call presents a largely positive picture: Magna delivered strong Q4 and full-year 2025 results with notable margin expansion, record free cash flow, a solid balance sheet and an encouraging 2026 outlook (sales near flat to modest growth, margin expansion, and robust free cash flow). Operational-excellence initiatives and technology partnerships underpin confidence. Downsides are mostly manageable: discrete P&V warranty/settlement items and ongoing recall work, program roll-offs (Complete Vehicles and some Seating impacts), and component/commodity cost uncertainty. Management cites mitigation actions (tariff recoveries, cost programs) and expects the positives to outweigh the transitory negatives in 2026.Q4-2025 Updates
Positive Updates
Strong Q4 Financial Performance
Q4 sales of $10,800,000,000, up 2% year-over-year (or down ~1% on a constant-currency basis); Q4 adjusted EBIT margin expanded 100 basis points to 7.5%; Q4 adjusted EBIT rose 18% to $814,000,000; Q4 adjusted EPS was $2.18, up 29%.
Robust Full-Year Cash Generation
Fiscal 2025 operating cash flow of $3,600,000,000 and free cash flow of $1,900,000,000 (increase of $849,000,000 year-over-year); free cash flow ~120% of adjusted net income; Q4 free cash flow > $1,300,000,000.
Margin Expansion and Operational Excellence
Third consecutive year of adjusted EBIT margin expansion: FY adjusted EBIT margin up 20 basis points to 5.6%; company expects an additional 35–40 basis points of operational-excellence benefit in 2026 and cumulative ~200 basis points from 2023–2026; unified digital architecture now covers ~80% of divisions and is driving measurable productivity and cost improvements.
Strong Balance Sheet and Capital Returns
Year-end liquidity of $5,100,000,000 including $1,600,000,000 cash on hand; leverage ~1.58x (rating-agency adjusted debt/EBITDA) with plan to be below 1.5x in 2026; returned ~ $700,000,000 to shareholders in FY2025 (dividends and buybacks); increased quarterly dividend by $0.01 (16th consecutive annual increase) and plans to repurchase ~22,000,000 shares under NCIB in 2026.
Positive 2026 Outlook with Margin and EPS Upside
2026 guidance implies sales near flat to +3.5% vs. 2025 (Magna-weighted production ~ -1%); adjusted EBIT margin guidance 6.0%–6.6% (40–100 bps expansion); adjusted EPS outlook $6.25–$7.25; free cash flow guidance $1,600,000,000–$1,800,000,000 with CapEx below 4% of sales.
Commercial Wins, Technology Partnerships and Awards
Hit annual bookings targets across multiple product areas; 2028 business ~90% secured; strengthened collaboration with NVIDIA on AI-powered active safety; record 151 customer awards for quality and operating performance; recognized in external rankings for ethical and admired companies.
Negative Updates
Complete Vehicles Revenue Pressure
Complete Vehicles sales declined 10% in the quarter, driven by lower engineering revenue and end-of-production for programs including Jaguar E‑PACE and I‑PACE; Complete Vehicles expected to remain a drag in 2026 with lower anticipated sales and margins.
Discrete Headwinds in Power & Vision (P&V)
P&V margins were negatively impacted in Q4 by discrete items, most notably a customer settlement for a product-related matter (including a warranty hit and ongoing recall work related to certain camera systems); these items reduced margins in the quarter and some issues remain under active remediation in 2026.
Localized Production Declines and Engineering Softness
Full-year sales were slightly down due to softer volumes in North America and Europe; global light vehicle production down ~1% in Q4 (Magna-weighted ~ -1%); engineering revenue was lower in Complete Vehicles and engineering activity remains less visible/softer versus production programs.
Dependency on Customer Recoveries and Program Timing
Free cash flow and Q4 performance benefited from >$400,000,000 of customer recoveries tied to cancelled/pushed EV programs; timing of recoveries can create lumpiness (some recoveries aided 2025 cash flow and are expected to be neutral on EBIT year-over-year for 2026 but timing differences remain a risk).
Commodity / Component Uncertainty (DRAM, Metals)
Potential DRAM supply/cost issues and higher raw material costs (e.g., aluminum, steel) create upside cost pressure; management has included a modest unrecovered cost headwind in the 2026 guide but exposure could change depending on customer negotiations and market dynamics.
Segment and Program Rolloffs Impacting 2026 Sales
Notable program roll-offs and transitions (e.g., Ford Escape plant retooling, end of BMW Z4 and Toyota Supra production in Graz) will reduce 2026 sales in certain segments (Seating expected ~6% decline in outlook), creating near-term dilution despite longer-term pipeline.
Company Guidance
Magna’s 2026 guidance calls for sales near flat to up 3.5% year-over-year (implying ~+1.5% over market at the midpoint), adjusted EBIT margin of 6.0–6.6% (up 40–100 bps from 2025’s 5.6%), adjusted EPS of $6.25–$7.25, and free cash flow of $1.6–$1.8 billion (over 90% of adjusted net income) with CapEx below 4% of sales (mid‑3%s), ~$180 million of interest expense and a 23% adjusted tax rate. Management expects operational excellence to contribute ~35–40 bps in 2026 (nearly +200 bps cumulative 2023–2026), first‑half EBIT just over 40% of full‑year (back‑half weighted), plans to repurchase ~22 million shares under the NCIB (assumes ~270 million average diluted shares), and targets leverage below 1.5x (ended 2025 at 1.58x) while maintaining $1.6 billion cash on hand and $5.1 billion total liquidity.Magna International Financial Statement Overview
Summary
Overall fundamentals are solid but mixed: operating cash flow is strong and steady with meaningfully positive free cash flow (Cash Flow Score 72), and the balance sheet is generally stable though debt increased in 2025 (Balance Sheet Score 67). The main drag is muted revenue growth and softer profitability/margins into 2025 (Income Statement Score 63), which limits near-term earnings quality despite continued positive EBIT/EBITDA.Income Statement
Revenue has been broadly flat since 2023 (2024 ~flat; 2025 up ~2%), indicating limited top-line momentum. Profitability has weakened versus prior years: net income declined from 2023 to 2025, and 2025 gross profit is notably lower than 2024 despite similar revenue—suggesting margin pressure. That said, earnings remain positive and EBIT/EBITDA are still solidly profitable, which supports resilience in a cyclical auto-parts backdrop.63
Positive
Balance Sheet
The balance sheet looks generally stable with equity building over time (higher equity in 2025 vs. 2024) and a sizeable asset base. Leverage is moderate for the industry (debt-to-equity around ~0.61 in 2023–2024), but total debt increased in 2025, which slightly reduces flexibility. Returns on equity were healthy in 2023–2024 (~9–10%), though the decline in earnings in 2025 likely pressures returns going forward.67
Positive
Cash Flow
Cash generation is a relative strength: operating cash flow remained strong and steady from 2024 to 2025 (both ~3.6B). Free cash flow is meaningfully positive, though it fell in 2025 (down ~11%) after improving in 2024. Overall, cash conversion appears supportive, but the recent step-down in free cash flow is a key watch item if margin pressure persists.72
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 42.75B | 42.84B | 42.80B | 37.84B | 36.24B |
| Gross Profit | 4.41B | 5.80B | 5.61B | 4.65B | 5.14B |
| EBITDA | 3.83B | 3.78B | 3.79B | 3.16B | 3.58B |
| Net Income | 843.51M | 1.01B | 1.21B | 592.00M | 1.51B |
Balance Sheet | |||||
| Total Assets | 31.36B | 31.04B | 32.26B | 27.79B | 29.09B |
| Cash, Cash Equivalents and Short-Term Investments | 1.61B | 1.25B | 1.20B | 1.23B | 2.95B |
| Total Debt | 8.32B | 7.07B | 7.22B | 5.07B | 5.67B |
| Total Liabilities | 18.54B | 19.10B | 19.98B | 16.45B | 16.86B |
| Stockholders Equity | 12.47B | 11.52B | 11.88B | 10.94B | 11.84B |
Cash Flow | |||||
| Free Cash Flow | 1.82B | 1.46B | 601.00M | 414.00M | 1.57B |
| Operating Cash Flow | 3.66B | 3.63B | 3.15B | 2.10B | 2.94B |
| Investing Cash Flow | -1.73B | -2.59B | -4.50B | -2.04B | -2.28B |
| Financing Cash Flow | -1.56B | -989.00M | 1.34B | -1.73B | -1.11B |
Magna International Technical Analysis
Positive
84.47
Price Trends
77.60
Positive
72.02
Positive
64.27
Positive
Market Momentum
3.31
Positive
56.42
Neutral
15.54
Positive
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 84.47 is above the 20-day moving average (MA) of 82.55, above the 50-day MA of 77.60, and above the 200-day MA of 64.27, indicating a bullish trend. The MACD of 3.31 indicates Positive momentum. The RSI at 56.42 is Neutral, neither overbought nor oversold. The STOCH value of 15.54 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:MG.
Magna International Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | C$15.97B | 20.25 | 15.16% | 1.44% | 7.12% | 17.15% | |
73 Outperform | $5.51B | 22.62 | 4.01% | 1.32% | -5.33% | -57.58% | |
71 Outperform | C$282.29M | 11.45 | 6.05% | 6.21% | -3.53% | -17.19% | |
66 Neutral | $23.80B | 20.60 | 6.90% | 3.69% | 0.66% | -0.61% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
51 Neutral | C$756.10M | -18.57 | -2.64% | 1.93% | -7.25% | -143.07% | |
45 Neutral | C$569.73M | -72.38 | 18.07% | ― | -26.93% | 84.17% |
* Consumer Cyclical Sector Average
TSE:MG
Magna International
84.47
33.80
66.70%
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Magna International Corporate Events
Business Operations and StrategyStock BuybackDividendsFinancial Disclosures
Magna Delivers Strong Q4 2025, Sets Confident 2026 Outlook With Buyback Plan
Positive
Feb 13, 2026
Magna International reported fourth-quarter 2025 sales of $10.8 billion, up 2% despite a 1% decline in global light vehicle production, driven by higher volumes on ongoing and new programs and favorable currency movements. Adjusted EBIT rose 18% to $814 million, expanding margin to 7.5%, while adjusted diluted EPS climbed 29% to $2.18, and the company generated $2.0 billion in operating cash flow and $1.3 billion in free cash flow, ending the year with $1.6 billion in cash.
For full-year 2025, Magna expanded adjusted EBIT margin by 20 basis points and produced robust free cash flow of $1.9 billion, supporting its 16th consecutive annual dividend increase to $0.495 per share. Looking to 2026, the company projects sales between $41.9 billion and $43.5 billion, adjusted EBIT margin of 6.0% to 6.6%, free cash flow of $1.6 billion to $1.8 billion, capital spending below historical levels, and plans to repurchase the remaining roughly 22 million shares under its current buyback authorization, underscoring confidence in its operational momentum and capital allocation strategy.
The most recent analyst rating on (TSE:MG) stock is a Hold with a C$57.00 price target. To see the full list of analyst forecasts on Magna International stock, see the TSE:MG Stock Forecast page.
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.