Magna International (TSX:MG) - Share price, News & Analysis

Q: What is the Fair Price of MG when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

MG (CA$67.3) is trading below our estimate of [[fair value]] (CA$202.56)

MG fundamental analysis
Snowflake Score
Valuation	2/6
Future Growth	4/6
Past Performance	0/6
Financial Health	5/6
Dividends	5/6

MG Stock Overview

Magna International Inc. designs, engineers, and manufactures components, assemblies, systems, subsystems, and modules for original equipment manufacturers of vehicles and light trucks worldwide.

Rewards

Trading at 66.8% below our estimate of its fair value

Earnings are forecast to grow 23.06% per year

Pays a reliable dividend of 3.65%

Risk Analysis

Large one-off items impacting financial results

Profit margins (1.9%) are lower than last year (5.6%)

Significant insider selling over the past 3 months

Magna International Competitors

Linamar

TSX:LNR

CA$3.5b

Martinrea International

TSX:MRE

CA$692.9m

Exco Technologies

TSX:XTC

CA$297.7m

Fuyao Glass Industry Group

SHSE:600660

CN¥89.2b

Price History & Performance

Summary of all time highs, changes and price drops for Magna International
Historical stock prices
Current Share Price	CA$67.30
52 Week High	CA$113.00
52 Week Low	CA$64.49
Beta	1.53
1 Month Change	-9.24%
3 Month Change	-5.81%
1 Year Change	-30.94%
3 Year Change	0.43%
5 Year Change	-0.56%
Change since IPO	3,112.41%

Recent News & Updates

Sep 20

We Think Magna International (TSE:MG) Can Stay On Top Of Its Debt

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility...

Shareholder Returns

	MG	CA Auto Components	CA Market
7D	-3.9%	-4.8%	3.3%
1Y	-30.9%	-29.3%	-4.0%

Return vs Industry: MG matched the Canadian Auto Components industry which returned -30.8% over the past year.

Return vs Market: MG underperformed the Canadian Market which returned -6.6% over the past year.

Price Volatility

Is MG's price volatile compared to industry and market?
MG volatility
MG Average Weekly Movement	5.4%
Auto Components Industry Average Movement	6.0%
Market Average Movement	10.1%
10% most volatile stocks in CA Market	18.4%
10% least volatile stocks in CA Market	3.8%

Stable Share Price: MG is less volatile than 75% of Canadian stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: MG's weekly volatility (5%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1957	161,000	Swamy Kotagiri	https://www.magna.com

Magna 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.

Magna International Fundamentals Summary

How do Magna International's earnings and revenue compare to its market cap?
MG fundamental statistics
Market Cap	CA$19.45b
Earnings (TTM)	CA$931.50m
Revenue (TTM)	CA$49.14b

20.9x

P/E Ratio

0.4x

P/S Ratio

Is MG overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
MG income statement (TTM)
Revenue	US$36.03b
Cost of Revenue	US$31.37b
Gross Profit	US$4.67b
Other Expenses	US$3.98b
Earnings	US$683.00m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	2.36
Gross Margin	12.95%
Net Profit Margin	1.90%
Debt/Equity Ratio	31.0%

How did MG perform over the long term?

See historical performance and comparison

Dividends

3.6%

Current Dividend Yield

77%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is MG undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for MG?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for MG. This is calculated by dividing MG's market cap by their current preferred multiple.
What is MG's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$14.26b

MG key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	0.5x
Enterprise Value/EBITDA	5.6x
PEG Ratio	0.9x

Price to Earnings Ratio vs Peers

How does MG's PE Ratio compare to its peers?

MG PE Ratio vs Peers

The above table shows the PE ratio for MG vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	19.5x
LNR Linamar	9.7x	n/a	CA$3.5b
MRE Martinrea International	29x	119.6%	CA$692.9m
XTC Exco Technologies	14.5x	72.6%	CA$297.7m
600660 Fuyao Glass Industry Group	24.9x	21.9%	CN¥89.2b
MG Magna International	20.9x	23.1%	CA$19.4b

Price-To-Earnings vs Peers: MG is expensive based on its Price-To-Earnings Ratio (20.9x) compared to the peer average (19.5x).

Price to Earnings Ratio vs Industry

How does MG's PE Ratio compare vs other companies in the North American Auto Components Industry?

Price-To-Earnings vs Industry: MG is expensive based on its Price-To-Earnings Ratio (20.9x) compared to the North American Auto Components industry average (17.3x)

Price to Earnings Ratio vs Fair Ratio

What is MG's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

MG PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	20.9x
Fair PE Ratio	11.8x

Price-To-Earnings vs Fair Ratio: MG is expensive based on its Price-To-Earnings Ratio (20.9x) compared to the estimated Fair Price-To-Earnings Ratio (11.8x).

Share Price vs Fair Value

What is the Fair Price of MG when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: MG (CA$67.3) is trading below our estimate of fair value (CA$202.56)

Significantly Below Fair Value: MG is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.

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Future Growth

How is Magna International forecast to perform in the next 1 to 3 years based on estimates from 18 analysts?

Future Growth Score

4/6

Future Growth Score 4/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

23.1%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: MG's forecast earnings growth (23.1% per year) is above the savings rate (1.6%).

Earnings vs Market: MG's earnings (23.1% per year) are forecast to grow faster than the Canadian market (7.5% per year).

High Growth Earnings: MG's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: MG's revenue (6.9% per year) is forecast to grow faster than the Canadian market (5.8% per year).

High Growth Revenue: MG's revenue (6.9% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: MG's Return on Equity is forecast to be low in 3 years time (17.6%).

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Past Performance

How has Magna International performed over the past 5 years?

Past Performance Score

0/6

Past Performance Score 0/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-17.7%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: MG has a large one-off loss of $577.0M impacting its June 30 2022 financial results.

Growing Profit Margin: MG's current net profit margins (1.9%) are lower than last year (5.6%).

Past Earnings Growth Analysis

Earnings Trend: MG's earnings have declined by 17.7% per year over the past 5 years.

Accelerating Growth: MG's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: MG had negative earnings growth (-68.7%) over the past year, making it difficult to compare to the Auto Components industry average (-51.3%).

Return on Equity

High ROE: MG's Return on Equity (6.4%) is considered low.

Discover strong past performing companies

Financial Health

How is Magna International's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: MG's short term assets ($12.8B) exceed its short term liabilities ($9.8B).

Long Term Liabilities: MG's short term assets ($12.8B) exceed its long term liabilities ($6.1B).

Debt to Equity History and Analysis

Debt Level: MG's net debt to equity ratio (16.3%) is considered satisfactory.

Reducing Debt: MG's debt to equity ratio has increased from 30.6% to 31% over the past 5 years.

Debt Coverage: MG's debt is well covered by operating cash flow (67%).

Interest Coverage: MG's interest payments on its debt are well covered by EBIT (16.7x coverage).

Balance Sheet

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Dividend

What is Magna International current dividend yield, its reliability and sustainability?

Dividend Score

5/6

Dividend Score 5/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

3.65%

Current Dividend Yield

Dividend Yield vs Market

Magna International Dividend Yield vs Market

How does Magna International dividend yield compare to the market?
Segment	Dividend Yield
Company (Magna International)	3.6%
Market Bottom 25% (CA)	1.9%
Market Top 25% (CA)	6.0%
Industry Average (Auto Components)	3.3%
Analyst forecast in 3 Years (Magna International)	3.8%

Notable Dividend: MG's dividend (3.65%) is higher than the bottom 25% of dividend payers in the Canadian market (2.02%).

High Dividend: MG's dividend (3.65%) is low compared to the top 25% of dividend payers in the Canadian market (6.08%).

Stability and Growth of Payments

Stable Dividend: MG's dividends per share have been stable in the past 10 years.

Growing Dividend: MG's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: At its current payout ratio (77.4%), MG's payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonable cash payout ratio (57.7%), MG's dividend payments are covered by cash flows.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

1.8yrs

Average management tenure

CEO

Swamy Kotagiri

1.75yrs

Tenure

US$10,870,000

Compensation

Mr. Seetarama Swamy Kotagiri, also known as Swamy, M.Sc., serves as Chief Executive Officer and Director at Magna International Inc. since January 1, 2021. He served as President at Magna International Inc...

CEO Compensation Analysis

Swamy Kotagiri's Compensation vs Magna International Earnings

How has Swamy Kotagiri's remuneration changed compared to Magna International's earnings?
Date	Total Comp.	Salary	Company Earnings
Jun 30 2022	n/a	n/a	US$683m
Mar 31 2022	n/a	n/a	US$1b
Dec 31 2021	US$11m	US$325k	US$2b
Sep 30 2021	n/a	n/a	US$2b
Jun 30 2021	n/a	n/a	US$2b
Mar 31 2021	n/a	n/a	US$1b
Dec 31 2020	US$7m	US$325k	US$757m
Sep 30 2020	n/a	n/a	US$459m
Jun 30 2020	n/a	n/a	-US$179m
Mar 31 2020	n/a	n/a	US$920m
Dec 31 2019	US$4m	US$325k	US$2b
Sep 30 2019	n/a	n/a	US$2b
Jun 30 2019	n/a	n/a	US$3b
Mar 31 2019	n/a	n/a	US$3b
Dec 31 2018	US$5m	US$325k	US$2b
Sep 30 2018	n/a	n/a	US$2b
Jun 30 2018	n/a	n/a	US$2b
Mar 31 2018	n/a	n/a	US$2b
Dec 31 2017	US$3m	US$325k	US$2b
Sep 30 2017	n/a	n/a	US$2b
Jun 30 2017	n/a	n/a	US$2b
Mar 31 2017	n/a	n/a	US$2b
Dec 31 2016	US$2m	US$325k	US$2b

Compensation vs Market: Swamy's total compensation ($USD10.87M) is above average for companies of similar size in the Canadian market ($USD8.12M).

Compensation vs Earnings: Swamy's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.

Leadership Team

Experienced Management: MG's management team is not considered experienced ( 1.8 years average tenure), which suggests a new team.

Board Members

Experienced Board: MG's board of directors are considered experienced (3.9 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: MG insiders have only sold shares in the past 3 months.

Recent Insider Transactions

TSX:MG Recent Insider Transactions by Companies or Individuals
Date	Value	Name	Entity	Shares	Max Price
07 Sep 22	SellCA$251,455	Aaron McCarthy	Individual	3,425	CA$73.42
11 Mar 22	BuyCA$138,455	Anton Mayer	Individual	1,830	CA$75.66
01 Mar 22	BuyCA$101,626	Mary Lou Maher	Individual	1,150	CA$88.37
15 Feb 22	SellCA$662,031	Matteo Del Sorbo	Individual	6,536	CA$101.29
14 Feb 22	BuyCA$97,400	Mary Lou Maher	Individual	1,000	CA$97.40
10 Feb 22	BuyCA$980,027	Vincent Galifi	Individual	9,498	CA$103.18
01 Dec 21	BuyCA$71,841	Anton Mayer	Individual	730	CA$98.41

Ownership Breakdown

What is the ownership structure of MG?
Owner Type	Number of Shares	Ownership Percentage
Public Companies	1,260	0.0004%
Employee Share Scheme	6,618	0.002%
Individual Insiders	1,364,768	0.5%
General Public	97,391,750	33.7%
Institutions	190,198,021	65.8%

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Top Shareholders

Top 25 shareholders own 41.83% of the company

Ownership	Name	Shares	Current Value	Change %	Portfolio %
3.24%	The Vanguard Group, Inc.	9,358,587	$629.8m	0.27%	0.01%
2.88%	Jarislowsky, Fraser Limited	8,310,223	$559.3m	15.5%	2.41%
2.78%	RBC Dominion Securities Inc., Asset Management Arm	8,045,301	$541.4m	9.17%	0.57%
2.78%	RBC Global Asset Management Inc.	8,036,648	$540.9m	5.69%	0.3%
2.76%	Hotchkis and Wiley Capital Management, LLC	7,981,094	$537.1m	-4.46%	1.52%
2.75%	T. Rowe Price Group, Inc.	7,936,862	$534.2m	-17.73%	0.05%
2.74%	Beutel Goodman & Company Ltd.	7,931,388	$533.8m	5.33%	2.22%
2.53%	Managed Account Advisors LLC	7,311,169	$492.0m	38.12%	0.1%
2.11%	TD Asset Management, Inc.	6,090,223	$409.9m	-2.08%	0.29%
1.82%	CIBC Asset Management Inc.	5,253,788	$353.6m	16.43%	0.65%
1.59%	BMO Asset Management Corp.	4,601,282	$309.7m	-9.54%	0.14%
1.42%	Lazard Asset Management LLC	4,106,607	$276.4m	17.09%	0.2%
1.32%	Mackenzie Financial Corporation	3,817,416	$256.9m	-7%	0.24%
1.31%	Principal Global Investors, LLC	3,796,170	$255.5m	0.05%	0.13%
1.25%	Fidelity International Ltd	3,603,983	$242.5m	-30.77%	0.09%
1.11%	The Bank of Nova Scotia, Banking Investments	3,196,871	$215.1m	6.01%	0.4%
1%	Norges Bank Investment Management	2,895,727	$194.9m	0%	0.02%
1%	ACR Alpine Capital Research, LLC	2,880,953	$193.9m	4.89%	6.96%
0.93%	Letko, Brosseau & Associates Inc.	2,693,762	$181.3m	1.82%	2.26%
0.93%	Canadian Imperial Bank of Commerce, Asset Management Arm	2,682,693	$180.5m	4.57%	0.53%
0.76%	Turtle Creek Asset Management Inc.	2,188,104	$147.3m	-0.07%	3.95%
0.73%	J.P. Morgan Asset Management, Inc.	2,114,960	$142.3m	-13.7%	0.02%
0.71%	Manulife Asset Management	2,065,590	$139.0m	17.49%	0.1%
0.71%	Amundi Asset Management	2,049,032	$137.9m	-7.34%	0.03%
0.67%	Dimensional Fund Advisors LP	1,938,424	$130.5m	21.11%	0.02%

Ticker	Exchange	Primary Security	Security Type	Country	Currency	Listed on
MGA	NYSE (New York Stock Exchange)	Yes	Common Shares	US	USD	Feb 1977
MG	TSX (The Toronto Stock Exchange)	Yes	Common Shares	CA	CAD	Feb 1977
MGA	DB (Deutsche Boerse AG)	Yes	Common Shares	DE	EUR	Feb 1977
MGA N	BMV (Bolsa Mexicana de Valores)	Yes	Common Shares	MX	MXN	Feb 1977

Data	Last Updated (UTC time)
Company Analysis	2022/10/03 00:00
End of Day Share Price	2022/10/03 00:00
Earnings	2022/06/30
Annual Earnings	2021/12/31