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Key Factors to Note Ahead of Magna's (MGA) Q3 Earnings
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Magna International (MGA - Free Report) is scheduled to report third-quarter 2021 results on Nov 5, before the bell. The Zacks Consensus Estimate for the quarter’s earnings is pegged at 63 cents per share on revenues of $7.85 billion.
This automotive components supplier registered lower-than-anticipated earnings in the last reported quarter.
Over the trailing four quarters, Magna surpassed the Zacks Consensus Estimate on three occasions and missed in the other, the average surprise being 25.77%. This is depicted in the graph below:
The Zacks Consensus Estimate for Magna’s third-quarter earnings per share witnessed a downward revision of 79 cents to 63 cents in the past 30 days. Moreover, this compares unfavorably with the year-ago quarter’s earnings of $1.95 per share, indicating a 67.69% plunge, year on year. Further, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year fall of 14.03%.
What the Zacks Model Says
Our proven model does not conclusively predict an earnings beat for Magna this time around. The combination of a positive Earnings ESP, and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the odds of an earnings beat, which is not the case here. This has been elaborated below.
Earnings ESP: Magna has an Earnings ESP of -19.79%. This is because the Most Accurate Estimate of 50 cents per share comes in 13 cents lower than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Magna, peers of which include American Axle (AXL - Free Report) , Meritor Inc and Adient Plc (ADNT - Free Report) , carries a Zacks Rank of 5 (Strong Sell) currently.
Magna is battling the global shortage of semiconductor supply, which is currently prevalent in the entire auto sector. Amid the impact of the COVID-19 pandemic on the global automotive supply chain and the massive chip dearth, the company expects reduced OEM production during the quarter under discussion and has forecast lower year-over-year light vehicle production in North America and Europe. This is anticipated to have reduced the demand for Magna's products during the quarter to be reported, resulting in declining revenues across all its segments.
Magna has been witnessing soaring costs of commodities like resin and steel that have inflated the manufacturing costs of the company. Further, the company has been incurring rising labor costs, additional costs for new facilities and launch costs for new programs. These cost headwinds are likely to have dented the company’s margins during the September-end quarter. Elevated capital spending to evolve its business profile for incorporating technologically-advanced new products might have impaired Magna’s quarterly performance further.
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Key Factors to Note Ahead of Magna's (MGA) Q3 Earnings
Magna International (MGA - Free Report) is scheduled to report third-quarter 2021 results on Nov 5, before the bell. The Zacks Consensus Estimate for the quarter’s earnings is pegged at 63 cents per share on revenues of $7.85 billion.
This automotive components supplier registered lower-than-anticipated earnings in the last reported quarter.
Over the trailing four quarters, Magna surpassed the Zacks Consensus Estimate on three occasions and missed in the other, the average surprise being 25.77%. This is depicted in the graph below:
Magna International Inc. Price and EPS Surprise
Magna International Inc. price-eps-surprise | Magna International Inc. Quote
Trend in Estimate Revisions
The Zacks Consensus Estimate for Magna’s third-quarter earnings per share witnessed a downward revision of 79 cents to 63 cents in the past 30 days. Moreover, this compares unfavorably with the year-ago quarter’s earnings of $1.95 per share, indicating a 67.69% plunge, year on year. Further, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year fall of 14.03%.
What the Zacks Model Says
Our proven model does not conclusively predict an earnings beat for Magna this time around. The combination of a positive Earnings ESP, and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the odds of an earnings beat, which is not the case here. This has been elaborated below.
Earnings ESP: Magna has an Earnings ESP of -19.79%. This is because the Most Accurate Estimate of 50 cents per share comes in 13 cents lower than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Magna, peers of which include American Axle (AXL - Free Report) , Meritor Inc and Adient Plc (ADNT - Free Report) , carries a Zacks Rank of 5 (Strong Sell) currently.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors at Play
Magna is battling the global shortage of semiconductor supply, which is currently prevalent in the entire auto sector. Amid the impact of the COVID-19 pandemic on the global automotive supply chain and the massive chip dearth, the company expects reduced OEM production during the quarter under discussion and has forecast lower year-over-year light vehicle production in North America and Europe. This is anticipated to have reduced the demand for Magna's products during the quarter to be reported, resulting in declining revenues across all its segments.
Magna has been witnessing soaring costs of commodities like resin and steel that have inflated the manufacturing costs of the company. Further, the company has been incurring rising labor costs, additional costs for new facilities and launch costs for new programs. These cost headwinds are likely to have dented the company’s margins during the September-end quarter. Elevated capital spending to evolve its business profile for incorporating technologically-advanced new products might have impaired Magna’s quarterly performance further.