Don't Judge Magna International on Technicals Alone - Check Its Fundamentals!

Now trading at a price of $60.52, Magna International has moved -0.3% so far today on a volume of 158,033, compared to its average of 1,122,629. In contrast, the S&P 500 index moved -0.3%.

Shares of Magna International have a 50-day average price of $58.624 as of January 2022. Magna International Inc. designs, engineers, and manufactures components, assemblies, systems, subsystems, and modules for original equipment manufacturers of vehicles and light trucks worldwide. The large-cap Consumer Cyclical company has 161,000 full time employees and is based in Aurora, Canada. Magna International has returned a 2.7% dividend yield over the last 12 months.

Solid Revenues With Low Leverage Levels:

2019-12-31 2020-12-31 2021-12-31
Revenue (MM) $39,431 $32,647 $36,242
Revenue Growth n/a -17.2% 11.01%
Gross Margins 13.7% 13.6% 14.2%
Gross Margins Growth n/a -0.73% 4.41%
Operating Margins 6.0% 4.6% 5.3%
Operating Margins Growth n/a -23.33% 15.22%
Earnings Per Share $5.59 $2.52 $5.0
EPS Growth n/a -54.92% 98.41%
Free Cash Flow (MM) $2,519 $2,133 $1,568
FCF Growth n/a -15.32% -26.49%
Capital Expenditures (MM) -$1,441 -$1,145 -$1,372
Net Debt / EBITDA 0.54 0.35 0.36

Magna International Is Fairly Priced at Current Levels:

Compared to the Consumer Cyclical sector's average of 24.11, Magna International has a trailing twelve month price to earnings (P/E) ratio of 24.0 and, based on its EPS guidance of 8.94, an expected P/E ratio of 6.8.

The firm's price to earnings growth (PEG) is 0.3, which indicates that the company is undervalued in terms of its expected earnings growth.

Magna International is undervalued in terms of its assets because its price to book (P/B) ratio is 1.6 compared to its sector average of 3.11. The company's shares are currently trading -0.8% below their Graham number, implying there is a margin of safety for the stock. The Graham number is calculated according to the formula:

√(22.5 * 3-year average EPS * book value per share) = √(22.5 * 4.37 * 37.833) = $60.99

Magna International Is the Subject of Mixed Market Indicators:

15 analysts are following Magna International and have set target prices ranging from $88 to $127 per share. On average, they have given the company a rating of buy. At the current price of $60.52, MGA is trading -43.54% away from its average analyst target price of $107.2 per share, implying an analyst consensus of strong upside potential for the stock.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.