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Magna (MGA) Hits 52-Week High, Can the Run Continue?
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Have you been paying attention to shares of Magna International (MGA - Free Report) ? Shares have been on the move with the stock up 24.4% over the past month. The stock hit a new 52-week high of $87.76 in the previous session. Magna International has gained 22.6% since the start of the year compared to the 6.5% move for the Zacks Auto-Tires-Trucks sector and the 3.3% return for the Zacks Automotive - Original Equipment industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on February 19, 2021, Magna reported EPS of $2.83 versus consensus estimate of $1.98 while it beat the consensus revenue estimate by 6.46%.
For the current fiscal year, Magna is expected to post earnings of $7.16 per share on $40.8 billion in revenues. This represents an 81.52% change in EPS on a 24.97% change in revenues. For the next fiscal year, the company is expected to earn $8.62 per share on $42.8 billion in revenues. This represents a year-over-year change of 20.29% and 4.91%, respectively.
Valuation Metrics
Magna may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Magna has a Value Score of B. The stock's Growth and Momentum Scores are C and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 12.1X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 10.2X versus its peer group's average of 12.4X. Additionally, the stock has a PEG ratio of 2.26. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Magna currently has a Zacks Rank of #1 (Strong Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Magna passes the test. Thus, it seems as though Magna shares could still be poised for more gains ahead.
How Does Magna Stack Up to the Competition?
Shares of Magna have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also solid potential picks, including Strattec Security (STRT - Free Report) , Autoliv (ALV - Free Report) , and LCI Industries (LCII - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 28% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Magna, even beyond its own solid fundamental situation.
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Magna (MGA) Hits 52-Week High, Can the Run Continue?
Have you been paying attention to shares of Magna International (MGA - Free Report) ? Shares have been on the move with the stock up 24.4% over the past month. The stock hit a new 52-week high of $87.76 in the previous session. Magna International has gained 22.6% since the start of the year compared to the 6.5% move for the Zacks Auto-Tires-Trucks sector and the 3.3% return for the Zacks Automotive - Original Equipment industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on February 19, 2021, Magna reported EPS of $2.83 versus consensus estimate of $1.98 while it beat the consensus revenue estimate by 6.46%.
For the current fiscal year, Magna is expected to post earnings of $7.16 per share on $40.8 billion in revenues. This represents an 81.52% change in EPS on a 24.97% change in revenues. For the next fiscal year, the company is expected to earn $8.62 per share on $42.8 billion in revenues. This represents a year-over-year change of 20.29% and 4.91%, respectively.
Valuation Metrics
Magna may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Magna has a Value Score of B. The stock's Growth and Momentum Scores are C and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 12.1X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 10.2X versus its peer group's average of 12.4X. Additionally, the stock has a PEG ratio of 2.26. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Magna currently has a Zacks Rank of #1 (Strong Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Magna passes the test. Thus, it seems as though Magna shares could still be poised for more gains ahead.
How Does Magna Stack Up to the Competition?
Shares of Magna have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also solid potential picks, including Strattec Security (STRT - Free Report) , Autoliv (ALV - Free Report) , and LCI Industries (LCII - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 28% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Magna, even beyond its own solid fundamental situation.