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Magna International (MGA) Down 5.5% Since Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Magna International, Inc. (MGA - Free Report) . Shares have lost about 5.5% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Magna International Q4 Earnings Lag, Revenues Top
Magna International reported fourth-quarter 2016 earnings per share of $1.24 that missed the Zacks Consensus Estimate of $1.38. Earnings also improved 4.2% from $1.19 recorded in the fourth quarter of 2015.
Revenues increased 8% year over year to $9.25 billion and steered past the Zacks Consensus Estimate of $9.22 billion as well.
Vehicle production dropped 4% to 4.4 million units in North America and 4% to 5.3 million units in Europe.
2016 Results
Magna International reported 2016 record earnings per share of $5.16 that missed the Zacks Consensus Estimate of $5.28. Earnings improved 9.3% from $4.72 recorded in 2015.
Revenues increased 13% year over year to a fiscal record of $36.4 billion but missed the Zacks Consensus Estimate of $36.5 billion.
Segment Details
Revenues at the External Production segment (comprising North America, Europe, Asia, and Rest of World or ROW units) rose 11.6% year over year to $7.88 billion in the reported quarter.
Sales in North America climbed 4% to $4.87 billion, driven by product launches and the acquisition of Getrag that contributed $137 million to sales. Revenues from Europe rose 20% year over year to $2.20 billion, backed by new product launches and benefits from acquisitions. Revenues from Asia jumped 40% to $663 million aided by the launch of programs, primarily in China, along with benefits from acquisitions. Revenues from ROW rose 53% to $133 million due to the launch of programs, primarily in Brazil, and higher net customer prices.
Revenues at the Complete Vehicle Assembly segment totaled $439 million, down 30% from $628 million a year ago. Moreover, assembly volumes declined 70% to 7,418 units.
Revenues from the Tooling, Engineering & Other segment increased 7% to $936 million in the quarter under review.
Financials
Magna International had $974 million of cash and cash equivalents as of Dec 31, 2016, compared with $2.9 billion as of Dec 31, 2015. The company had long-term debt of $2.5 billion as of Dec 31, 2016, compared with $2.6 billion as of Dec 31, 2015.
In 2016, Magna International’s cash flow from operations increased to $3.4 billion from $2.3 billion a year ago.
Capital Deployment
On Feb 23, 2017, the Board of Directors of the company raised the quarterly dividend by 10% to $0.275 from $0.25 per share. The dividend is payable on Mar 24, to shareholders on record as of Mar 10, 2017. With this, the company raised dividend for eight consecutive months.
In 2016, Magna International repurchased 22.6 million shares for $913 million.
Outlook
For 2017, Magna International projects revenues from the External Production segment in the band of $30.4–$31.7 billion. Meanwhile, Complete Vehicle Assembly sales are projected in the range of $2.7–$3 billion.
Thus, for 2017, the company expects total revenue between $36 billion and $37.7 billion. Tax rate is projected in the range of 25% to 26% while capital expenditures are anticipated at around $2 billion.
Magna International, based in Aurora, Canada, is a leading manufacturer and supplier of automotive components. The company designs, develops and manufactures automotive systems, assemblies, modules and components, apart from engineering and assembling complete vehicles, primarily for sale to original equipment manufacturers of cars and light trucks.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been two upward revisions for the current quarter compared to one downward.
At this time, Magna International's stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with a 'D'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending upward for the stock. The magnitude of these revisions also looks promising. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Magna International (MGA) Down 5.5% Since Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Magna International, Inc. (MGA - Free Report) . Shares have lost about 5.5% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Magna International Q4 Earnings Lag, Revenues Top
Magna International reported fourth-quarter 2016 earnings per share of $1.24 that missed the Zacks Consensus Estimate of $1.38. Earnings also improved 4.2% from $1.19 recorded in the fourth quarter of 2015.
Revenues increased 8% year over year to $9.25 billion and steered past the Zacks Consensus Estimate of $9.22 billion as well.
Vehicle production dropped 4% to 4.4 million units in North America and 4% to 5.3 million units in Europe.
2016 Results
Magna International reported 2016 record earnings per share of $5.16 that missed the Zacks Consensus Estimate of $5.28. Earnings improved 9.3% from $4.72 recorded in 2015.
Revenues increased 13% year over year to a fiscal record of $36.4 billion but missed the Zacks Consensus Estimate of $36.5 billion.
Segment Details
Revenues at the External Production segment (comprising North America, Europe, Asia, and Rest of World or ROW units) rose 11.6% year over year to $7.88 billion in the reported quarter.
Sales in North America climbed 4% to $4.87 billion, driven by product launches and the acquisition of Getrag that contributed $137 million to sales. Revenues from Europe rose 20% year over year to $2.20 billion, backed by new product launches and benefits from acquisitions. Revenues from Asia jumped 40% to $663 million aided by the launch of programs, primarily in China, along with benefits from acquisitions. Revenues from ROW rose 53% to $133 million due to the launch of programs, primarily in Brazil, and higher net customer prices.
Revenues at the Complete Vehicle Assembly segment totaled $439 million, down 30% from $628 million a year ago. Moreover, assembly volumes declined 70% to 7,418 units.
Revenues from the Tooling, Engineering & Other segment increased 7% to $936 million in the quarter under review.
Financials
Magna International had $974 million of cash and cash equivalents as of Dec 31, 2016, compared with $2.9 billion as of Dec 31, 2015. The company had long-term debt of $2.5 billion as of Dec 31, 2016, compared with $2.6 billion as of Dec 31, 2015.
In 2016, Magna International’s cash flow from operations increased to $3.4 billion from $2.3 billion a year ago.
Capital Deployment
On Feb 23, 2017, the Board of Directors of the company raised the quarterly dividend by 10% to $0.275 from $0.25 per share. The dividend is payable on Mar 24, to shareholders on record as of Mar 10, 2017. With this, the company raised dividend for eight consecutive months.
In 2016, Magna International repurchased 22.6 million shares for $913 million.
Outlook
For 2017, Magna International projects revenues from the External Production segment in the band of $30.4–$31.7 billion. Meanwhile, Complete Vehicle Assembly sales are projected in the range of $2.7–$3 billion.
Thus, for 2017, the company expects total revenue between $36 billion and $37.7 billion. Tax rate is projected in the range of 25% to 26% while capital expenditures are anticipated at around $2 billion.
Magna International, based in Aurora, Canada, is a leading manufacturer and supplier of automotive components. The company designs, develops and manufactures automotive systems, assemblies, modules and components, apart from engineering and assembling complete vehicles, primarily for sale to original equipment manufacturers of cars and light trucks.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed an upward trend in fresh estimates. There have been two upward revisions for the current quarter compared to one downward.
Magna International, Inc. Price and Consensus
Magna International, Inc. Price and Consensus | Magna International, Inc. Quote
VGM Scores
At this time, Magna International's stock has a great Growth Score of 'A', though it is lagging a lot on the momentum front with a 'D'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending upward for the stock. The magnitude of these revisions also looks promising. Interestingly, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.