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Why Is Magna (MGA) Up 14.7% Since Last Earnings Report?
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It has been about a month since the last earnings report for Magna (MGA - Free Report) . Shares have added about 14.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Magna 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's Q3 Earnings Up Y/Y, Sales Down
Magna reported third-quarter 2020 adjusted diluted earnings of $1.95 per share, up 38% from the $1.41 recorded in the year-ago period.
The reported figure also surpassed the Zacks Consensus Estimate of $1.35. Higher-than-expected revenues across all four segments of the company resulted in this outperformance.
For the reported quarter, net sales declined 2% from the prior-year period to $9,129 million. Nonetheless, revenues beat the Zacks Consensus Estimate of $8,953 million.
Segmental Performances
The Body Exteriors & Structures segment’s revenues for the reported quarter came in at $3,858 million, down 3% from the $3,984 million reported in the year-ago quarter. Lower European light vehicle production and net customer price concession subsequent to the third quarter of 2019 resulted in soft revenues. The figure, however, beat the consensus mark of $3,744 million. Also, the segment reported adjusted EBIT of $390 million, up from the $306 million posted in the prior-year quarter due to cost savings, lower launch costs and productivity improvements during the third quarter.
For the September-end quarter, the Power & Vision segment revenues climbed to $2,722 million from the prior-year figure of $2,696 million. The launch of programs during or subsequent to the third quarter of 2019 and the net strengthening of foreign currencies against the U.S. dollar boosted the unit’s sales. Moreover, the revenue figure surpassed the Zacks Consensus Estimate of $2,574 million. Also, pre-tax profit totaled $227 million compared with the $167 million recorded in third-quarter 2019.
Revenues in the Seating Systems segment inched up 1% year over year to $1,280 million in the July-September quarter thanks to roll out of programs during or subsequent to the third quarter of 2019 and the negative impact of the labor strike during the prior-year quarter. The metric also topped the Zacks Consensus Estimate of $1,177 million. Pretax profit was $66 million versus the prior-year profit of $56 million.
During the July-September period, the Complete Vehicles segment’s revenues were down 8% year on year to $1,402 million amid lower assembly volumes, due to the COVID-19 pandemic. The figure, nevertheless, surpassed the consensus mark of $1,361 million. Adjusted EBIT also grew to $70 million from the $29 million reported in the prior year on the back of a favorable program mix, higher engineering sales and cost-containment efforts.
Financials & Dividend
Magna had $1,498 million cash and cash equivalents as of Sep 30, 2020 compared with $1,276 million on Dec 31, 2019. It had a long-term debt of $3,832 million as of Sep 30, 2020, reflecting a rise from the $3,062 million recorded on Dec 31, 2019. For the reported quarter, cash provided from operating activities totaled $1,612 million as compared with the $750 million provided in the year-ago quarter.
Magna’s board of directors announced a dividend of 40 cents per share for third-quarter 2020, payable on Dec 4 to shareholders of record on Nov 20, 2020.
2020 Guidance
Magna expects full-year revenues in the band of $31.5-$32.5 billion, up from the previous estimate of $30-$32 billion amid gradual recovery in the light vehicle production in North America and Europe. Adjusted EBIT margin is anticipated in the range of 4-4.4%, higher than the earlier projection of 2.9-3.3%. The company envisions capital spending of $1.3 billion for 2020, down from the previous forecast of $1.4 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 22.31% due to these changes.
VGM Scores
At this time, Magna has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% 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.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Magna has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why Is Magna (MGA) Up 14.7% Since Last Earnings Report?
It has been about a month since the last earnings report for Magna (MGA - Free Report) . Shares have added about 14.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Magna 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's Q3 Earnings Up Y/Y, Sales Down
Magna reported third-quarter 2020 adjusted diluted earnings of $1.95 per share, up 38% from the $1.41 recorded in the year-ago period.
The reported figure also surpassed the Zacks Consensus Estimate of $1.35. Higher-than-expected revenues across all four segments of the company resulted in this outperformance.
For the reported quarter, net sales declined 2% from the prior-year period to $9,129 million. Nonetheless, revenues beat the Zacks Consensus Estimate of $8,953 million.
Segmental Performances
The Body Exteriors & Structures segment’s revenues for the reported quarter came in at $3,858 million, down 3% from the $3,984 million reported in the year-ago quarter. Lower European light vehicle production and net customer price concession subsequent to the third quarter of 2019 resulted in soft revenues. The figure, however, beat the consensus mark of $3,744 million. Also, the segment reported adjusted EBIT of $390 million, up from the $306 million posted in the prior-year quarter due to cost savings, lower launch costs and productivity improvements during the third quarter.
For the September-end quarter, the Power & Vision segment revenues climbed to $2,722 million from the prior-year figure of $2,696 million. The launch of programs during or subsequent to the third quarter of 2019 and the net strengthening of foreign currencies against the U.S. dollar boosted the unit’s sales. Moreover, the revenue figure surpassed the Zacks Consensus Estimate of $2,574 million. Also, pre-tax profit totaled $227 million compared with the $167 million recorded in third-quarter 2019.
Revenues in the Seating Systems segment inched up 1% year over year to $1,280 million in the July-September quarter thanks to roll out of programs during or subsequent to the third quarter of 2019 and the negative impact of the labor strike during the prior-year quarter. The metric also topped the Zacks Consensus Estimate of $1,177 million. Pretax profit was $66 million versus the prior-year profit of $56 million.
During the July-September period, the Complete Vehicles segment’s revenues were down 8% year on year to $1,402 million amid lower assembly volumes, due to the COVID-19 pandemic. The figure, nevertheless, surpassed the consensus mark of $1,361 million. Adjusted EBIT also grew to $70 million from the $29 million reported in the prior year on the back of a favorable program mix, higher engineering sales and cost-containment efforts.
Financials & Dividend
Magna had $1,498 million cash and cash equivalents as of Sep 30, 2020 compared with $1,276 million on Dec 31, 2019. It had a long-term debt of $3,832 million as of Sep 30, 2020, reflecting a rise from the $3,062 million recorded on Dec 31, 2019. For the reported quarter, cash provided from operating activities totaled $1,612 million as compared with the $750 million provided in the year-ago quarter.
Magna’s board of directors announced a dividend of 40 cents per share for third-quarter 2020, payable on Dec 4 to shareholders of record on Nov 20, 2020.
2020 Guidance
Magna expects full-year revenues in the band of $31.5-$32.5 billion, up from the previous estimate of $30-$32 billion amid gradual recovery in the light vehicle production in North America and Europe. Adjusted EBIT margin is anticipated in the range of 4-4.4%, higher than the earlier projection of 2.9-3.3%. The company envisions capital spending of $1.3 billion for 2020, down from the previous forecast of $1.4 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 22.31% due to these changes.
VGM Scores
At this time, Magna has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% 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.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Magna has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.