Latest news with #MagnaInternational
Globe and Mail
12 hours ago
- Automotive
- Globe and Mail
Magna shares are reeling from tariffs. And they're worth a look
The share price of Magna International Inc. MG-T has been battered over the past several years by rising inflation, rising interest rates and, now, rising tariffs. What will it take to get the share price rising? Capitulation – the point at which just about everyone has given up on a turnaround, signalling that shares may have hit rock bottom – might be the best hope for investors brave enough to bet on a stock that is facing a lot of challenges. From a recent high in 2021, the share price has fallen about 60 per cent. That's a severe dip for one of the world's largest auto parts companies and a key supplier to top vehicle manufacturers in North America, Europe and China. Part of the problem is that vehicle production has run into economic headwinds in recent years, as central banks raised their key interest rates in a battle against surging inflation. Though inflation has subsided, consumer confidence has tanked this year as U.S. tariff policies threaten to disrupt, among other things, the integrated automotive sector. In its latest quarterly results, released in May, Magna said U.S. and European light vehicle production fell 5 per cent and 8 per cent, respectively, year-over-year. Its sales in the first quarter fell 8 per cent from the same period last year. Earnings declined 28 per cent as margins shrank. What's arguably worse for investors, though, is the fear of what's coming. Trade-related chaos and a U.S. policy shift away from incentivizing electric vehicles mean Magna's future performance is difficult to pin down. No wonder the shares trade at just nine times trailing earnings. What's more, the company has taken on a lot of debt since acquiring Veoneer Active Safety for US$1.5-billion in 2023. The purchase increased Magna's leverage ratio – which compares debt to EBITDA, or earnings before interest, taxes, depreciation and amortization – to a lofty 2.5. The company aimed to reduce this ratio to below 1.5 times EBITDA by the end of 2024. That didn't happen. The ratio is currently sitting at 1.9 times EBITDA. Moody's Ratings doesn't expect it to fall to the company's target until the end of 2026 because of weak market conditions. Analysis: Is it time to finally take the dream of a Canadian automaker seriously? Flavio Volpe makes his case Magna has responded by pausing share repurchases 'given the uncertainty that we have in the market,' said chief executive Swamy Kotagiri during a call with analysts last month. One other thing to worry about: Magna's sales are falling faster than the market for light vehicles, which is a troubling development if the market continues to soften. After analysts at CIBC Capital Markets accounted for Magna's geographic sales weighting and excluded its complete vehicle manufacturing, the company still underperformed the market by 1 per cent. Nonetheless, the dismal market conditions that have weighed heavily on Magna's share price may entice some investors looking for a turnaround opportunity. This isn't as outrageously risky as it may appear. The share price bottomed out on April 8, when the S&P/TSX Composite Index also touched its low point for the year. Magna's share price has since rebounded about 17 per cent, suggesting the biggest concerns about tariffs are now fading. Auto parts executive believes U.S. will drop auto tariffs when USMCA renegotiated Indeed, Magna expects that tariffs may not be the huge issue that initially panicked investors. The company estimates the direct tariff impact in 2025 will be about US$250-million, which is less than what some analysts had feared. Even better, Magna expects it can pass along these additional costs to its customers. After this update, Ryan Brinkman, an analyst at J.P. Morgan, raised his 2025 earnings forecast (before interest and taxes) by more than 8 per cent, to US$2.06-billion, and expects the shares to rebound given the low valuation. The lingering issue is what tariffs will do to the vehicle market or, for that matter, the broader economy. Cox Automotive reported last month that the average vehicle transaction price in April increased 2.5 per cent month-over-month, marking one of the sharpest increases in the past decade. That's more bad news for anyone betting on an auto parts company. But with Magna's share price already caught in a four-year slump, the bad news may be adding up to an opportunity.
Business Insider
3 days ago
- Business
- Business Insider
BRP (DOOO) Gets a Hold from Scotiabank
Scotiabank analyst Jonathan Goldman maintained a Hold rating on BRP (DOOO – Research Report) yesterday and set a price target of C$67.00. The company's shares closed yesterday at $44.00. Confident Investing Starts Here: Goldman covers the Consumer Cyclical sector, focusing on stocks such as Magna International, Linamar, and BRP. According to TipRanks, Goldman has an average return of 6.0% and a 48.78% success rate on recommended stocks. In addition to Scotiabank, BRP also received a Hold from National Bank's Cameron Doerksen in a report issued yesterday. However, on the same day, Stifel Nicolaus upgraded BRP (NASDAQ: DOOO) to a Buy.
Business Insider
19-05-2025
- Automotive
- Business Insider
Barclays Sticks to Its Hold Rating for Magna International (MGA)
Barclays analyst Dan Levy maintained a Hold rating on Magna International (MGA – Research Report) on May 16 and set a price target of $40.00. The company's shares closed last Friday at $36.69. Confident Investing Starts Here: Easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks straight to you inbox with TipRanks' Smart Value Newsletter Levy covers the Consumer Cyclical sector, focusing on stocks such as Tesla, Dana Holding, and BorgWarner. According to TipRanks, Levy has an average return of -3.6% and a 34.57% success rate on recommended stocks. Magna International has an analyst consensus of Hold, with a price target consensus of $37.77, which is a 2.94% upside from current levels. In a report released on May 5, CIBC also maintained a Hold rating on the stock with a $38.00 price target.
Yahoo
14-05-2025
- Automotive
- Yahoo
Magna International (TSX:MG) Reports Surge In Q1 2025 Net Income To US$146 Million
Magna International recently raised its earnings guidance for 2025 to forecast higher sales, and reported strong Q1 2025 earnings with a net income surge from $9 million to $146 million, significantly boosting investor confidence. The company also continued its share repurchase initiative, buying back 1.3 million shares. Despite a 9% decline in sales, these positive developments likely fueled the company's 16% price increase over the last month, well surpassing the broader market's 4% rise. This growth could suggest strong confidence in Magna's strategic direction and financial health amidst competitive market dynamics. Buy, Hold or Sell Magna International? View our complete analysis and fair value estimate and you decide. Uncover 19 companies that survived and thrived after COVID and have the right ingredients to survive Trump's tariffs. The recent earnings guidance raise and impressive net income figures for Magna International are likely to reinforce analysts' confidence in the company's future outlook. The decision to buy back 1.3 million shares potentially indicates a strong internal belief in Magna's future prospects, which could positively impact the company's revenue and earnings forecasts. Despite macroeconomic challenges, the firm has shown resilience, especially with its focus on the Chinese market, which may be pivotal for future revenue enhancements. With the company's shares currently trading at CA$53.12, there remains a 19.4% price movement opportunity to align with the consensus price target of CA$65.91. This potential appreciation could be fueled by the anticipated earnings growth and operational improvements highlighted. Over the past five years, Magna's total shareholder return was 13.79%, providing a moderate return for investors. In contrast, its performance in the last year was on par with the Canadian Auto Components industry, which returned 20.1% less than a year ago. This longer-term positive return indicates a degree of resilience and indicates that recent positive news, such as improved earnings guidance and strategic focus, could further strengthen its position. However, ongoing industry challenges and global economic factors might temper expectations. Understanding the balance between these drivers is crucial for investors evaluating Magna's future potential. Explore historical data to track Magna International's performance over time in our past results report. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include TSX:MG. Have feedback on this article? Concerned about the content? with us directly. Alternatively, email editorial-team@ Error while retrieving data Sign in to access your portfolio Error while retrieving data
Yahoo
11-05-2025
- Business
- Yahoo
Magna International Inc. (TSE:MG) Stock Goes Ex-Dividend In Just Four Days
Some investors rely on dividends for growing their wealth, and if you're one of those dividend sleuths, you might be intrigued to know that Magna International Inc. (TSE:MG) is about to go ex-dividend in just four days. The ex-dividend date is commonly two business days before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Thus, you can purchase Magna International's shares before the 16th of May in order to receive the dividend, which the company will pay on the 30th of May. The company's next dividend payment will be US$0.485 per share. Last year, in total, the company distributed US$1.94 to shareholders. Calculating the last year's worth of payments shows that Magna International has a trailing yield of 5.6% on the current share price of CA$48.51. If you buy this business for its dividend, you should have an idea of whether Magna International's dividend is reliable and sustainable. As a result, readers should always check whether Magna International has been able to grow its dividends, or if the dividend might be cut. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. Dividends are typically paid out of company income, so if a company pays out more than it earned, its dividend is usually at a higher risk of being cut. That's why it's good to see Magna International paying out a modest 48% of its earnings. A useful secondary check can be to evaluate whether Magna International generated enough free cash flow to afford its dividend. Thankfully its dividend payments took up just 36% of the free cash flow it generated, which is a comfortable payout ratio. It's positive to see that Magna International's dividend is covered by both profits and cash flow, since this is generally a sign that the dividend is sustainable, and a lower payout ratio usually suggests a greater margin of safety before the dividend gets cut. See our latest analysis for Magna International Click here to see the company's payout ratio, plus analyst estimates of its future dividends. Businesses with shrinking earnings are tricky from a dividend perspective. If earnings fall far enough, the company could be forced to cut its dividend. With that in mind, we're discomforted by Magna International's 6.2% per annum decline in earnings in the past five years. Such a sharp decline casts doubt on the future sustainability of the dividend. Another key way to measure a company's dividend prospects is by measuring its historical rate of dividend growth. Magna International has delivered an average of 9.8% per year annual increase in its dividend, based on the past 10 years of dividend payments. Has Magna International got what it takes to maintain its dividend payments? Magna International has comfortably low cash and profit payout ratios, which may mean the dividend is sustainable even in the face of a sharp decline in earnings per share. Still, we consider declining earnings to be a warning sign. In summary, while it has some positive characteristics, we're not inclined to race out and buy Magna International today. Wondering what the future holds for Magna International? See what the 16 analysts we track are forecasting, with this visualisation of its historical and future estimated earnings and cash flow If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error while retrieving data Sign in to access your portfolio Error while retrieving data
