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Magna International (MGA) Up 1.8% Since Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Magna International, Inc. (MGA - Free Report) . Shares have added about 1.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? 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 Beats on Q1 Earnings, Revenues
Magna International reported first-quarter 2017 earnings per share of $1.53 that surpassed the Zacks Consensus Estimate of $1.34. Earnings also improved 25% from $1.22 recorded in the first quarter of 2016.
Revenues increased 5% year over year to $9.37 billion and outperformed the Zacks Consensus Estimate of $9.26 billion as well.
The company also reported an increase in adjusted EBIT to $831 million, from the year-ago figure of $698 million.
Vehicle production dropped 1% to 4.5 million units in North America and increased 2% to 5.76 million units in Europe.
Segment Details
Revenues at the External Production segment (comprising North America, Europe, Asia, and Rest of World or ROW units) rose 8% year over year to $8.23 billion in the reported quarter.
Sales in North America climbed 7% to $5.09 billion, driven by product launches. Revenues from Europe rose 8% year over year to $2.46 billion, backed by new product launches and benefits from acquisitions. Revenues from Asia jumped 10% to $557 million. The rise was aided by the launch of new programs, primarily in China along with benefits from acquisitions. Revenues from ROW rose 58% to $126 million due to the launch of new programs, primarily in Brazil, and higher net customer prices.
Revenues at the Complete Vehicle Assembly segment totaled $413 million, down 31% from $596 million a year ago. Moreover, assembly volumes declined 65% to 8,200 units.
Revenues from the Tooling, Engineering & Other segment increased 6% to $726 million in the quarter under review.
Financials
Magna International had $831 million of cash and cash equivalents as of Mar 31, 2017, compared with $974 million as of Dec 31, 2016. The company had long-term debt of $2.39 billion as of Mar 31, 2017, in line with the Dec 31, 2016 figure.
In first quarter 2017, Magna International’s cash flow from operations were $870 million.
Capital Deployment
On May 11, 2017, the board of directors of the company announced a quarterly dividend of $0.275 cents for the first quarter. This dividend is payable on Jun 9, 2017, to shareholders of record as on May 26, 2017.
In the first quarter, Magna International repurchased 2.3 million shares for $100 million and paid a dividend of $105 million.
Outlook
For 2017, Magna International projects revenues from the Light Vehicle Production segment within the range of $30.8–$32.1 billion. Meanwhile, Complete Vehicle Assembly sales are projected in the range of $2.7–$3 billion.
Thus for 2017, the company expects total revenue within $36.6–$38.3 billion. Tax rate is projected in the range of 25–26%, 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 a downward trend in fresh estimates. There have been two revisions lower for the current quarter.
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'. 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.
Based on our scores, the stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, 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) Up 1.8% Since Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Magna International, Inc. (MGA - Free Report) . Shares have added about 1.8% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? 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 Beats on Q1 Earnings, Revenues
Magna International reported first-quarter 2017 earnings per share of $1.53 that surpassed the Zacks Consensus Estimate of $1.34. Earnings also improved 25% from $1.22 recorded in the first quarter of 2016.
Revenues increased 5% year over year to $9.37 billion and outperformed the Zacks Consensus Estimate of $9.26 billion as well.
The company also reported an increase in adjusted EBIT to $831 million, from the year-ago figure of $698 million.
Vehicle production dropped 1% to 4.5 million units in North America and increased 2% to 5.76 million units in Europe.
Segment Details
Revenues at the External Production segment (comprising North America, Europe, Asia, and Rest of World or ROW units) rose 8% year over year to $8.23 billion in the reported quarter.
Sales in North America climbed 7% to $5.09 billion, driven by product launches. Revenues from Europe rose 8% year over year to $2.46 billion, backed by new product launches and benefits from acquisitions. Revenues from Asia jumped 10% to $557 million. The rise was aided by the launch of new programs, primarily in China along with benefits from acquisitions. Revenues from ROW rose 58% to $126 million due to the launch of new programs, primarily in Brazil, and higher net customer prices.
Revenues at the Complete Vehicle Assembly segment totaled $413 million, down 31% from $596 million a year ago. Moreover, assembly volumes declined 65% to 8,200 units.
Revenues from the Tooling, Engineering & Other segment increased 6% to $726 million in the quarter under review.
Financials
Magna International had $831 million of cash and cash equivalents as of Mar 31, 2017, compared with $974 million as of Dec 31, 2016. The company had long-term debt of $2.39 billion as of Mar 31, 2017, in line with the Dec 31, 2016 figure.
In first quarter 2017, Magna International’s cash flow from operations were $870 million.
Capital Deployment
On May 11, 2017, the board of directors of the company announced a quarterly dividend of $0.275 cents for the first quarter. This dividend is payable on Jun 9, 2017, to shareholders of record as on May 26, 2017.
In the first quarter, Magna International repurchased 2.3 million shares for $100 million and paid a dividend of $105 million.
Outlook
For 2017, Magna International projects revenues from the Light Vehicle Production segment within the range of $30.8–$32.1 billion. Meanwhile, Complete Vehicle Assembly sales are projected in the range of $2.7–$3 billion.
Thus for 2017, the company expects total revenue within $36.6–$38.3 billion. Tax rate is projected in the range of 25–26%, 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 a downward trend in fresh estimates. There have been two revisions lower for the current quarter.
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'. 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.
Based on our scores, the stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.