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Magna (MGA) Inches Up 4% Since Q1 Earnings & Sales Beat

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Magna International’s (MGA - Free Report) shares have moved up 4% since it reported impressive first-quarter 2021 results on May 6, before the opening bell. Not only did the auto equipment supplier post a comprehensive beat, it also recorded higher year-over-year earnings and revenues. Investors were also encouraged by the raised 2021 guidance provided by the company.

Magna reported first-quarter 2020 adjusted earnings of $1.86 per share, skyrocketing more than 116% from the year-ago period. The reported figure also surpassed the Zacks Consensus Estimate of $1.57 per share. Higher-than-expected contribution from Complete Vehicles, and Power & Vision segments resulted in this outperformance. For the reported quarter, net sales rose 17.5% from the prior-year period to $10,179 million. The top line also outpaced the Zacks Consensus Estimate of $9,467 million.

Segmental Performances

The Body Exteriors & Structures segment’s revenues for the reported quarter came in at $4,025 million, up 9% from $3,676 million in the year-ago period. The sales figure compared favorably with the year-ago period due to the launch of new models, forex gains and higher global light vehicle production. Consequently, the segment reported adjusted EBIT of $327 million, reflecting a 64.3% year-over-year jump on cost savings, productivity improvements and higher sales.

For the March-end quarter, the Power & Vision segment revenues climbed to $3,156 million from the prior-year figure of $2,523 million. Launch of programs during or subsequent to first-quarter 2020, increase in light vehicle production and net strengthening of foreign currencies against the U.S. dollar boosted the unit’s sales. Further, cost-cut efforts and higher sales led to a whopping 120% year-over-year surge in EBIT. Segmental EBIT of $297 million also surpassed the consensus mark of $205 million. 

Revenues in the Seating Systems segment edged up 3% year over year to $1,303 million for the reported quarter due to the launch of new programs subsequent to first-quarter 2020 and favorable foreign currency translations. Pretax profit also increased 37.5% year over year to $55 million, thanks to productivity and efficiency improvements.

For the January-March period, the Complete Vehicles segment’s revenues grew 40% year over year to $1,850 million amid higher assembly volumes and forex gains. Adjusted EBIT soared 60% year over year to $80 million on the back of a favorable program mix and cost-containment efforts. The metric also outpaced the consensus mark of $73 million.

Financials & Updated Guidance

Magna — whose peers include American Axle & Manufacturing (AXL - Free Report) , Adient (ADNT - Free Report) and Meritor (MTOR - Free Report) — had $3,464 million cash and cash equivalents as of Mar 31, 2021. It had a long-term debt of $3,935 million. For the reported quarter, cash provided from operating activities totaled $661 million compared with $639 million in the year-ago period. During the quarter under review, Magna returned $280 million to shareholders via dividends ($130 million) and stock buybacks ($150 million).

It expects full-year 2021 revenues in the band of $40.2-$41.8 billion, up from the previous forecast of $40-$41.6 billion. Adjusted EBIT margin is anticipated in the range of 7.2-7.6%, reflecting an improvement from the prior guided range of 7.1-7.5%. The Zacks Rank #3 (Hold) company envisions capital spending of $1.6 billion in 2021. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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