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Magna (MGA) Segmental Estimates Signal Dull Q1 Earnings Show

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Magna International (MGA - Free Report) is scheduled to report first-quarter 2022 results on Apr 29, before the bell. The Zacks Consensus Estimate for the quarter’s earnings and revenues is pegged at $1.05 per share and $8.88 billion, respectively.

This automotive equipment supplier’s fourth-quarter 2021 earnings topped the Zacks Consensus Estimate on higher-than-expected EBIT across all segments. Over the trailing four quarters, Magna surpassed the Zacks Consensus Estimate on two occasions for as many misses, with the average surprise being 11.8%.

Magna International Inc. Price and EPS Surprise

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 first-quarter earnings per share has witnessed a downward revision of 3 cents in the past seven days. The bottom-line projection calls for a year-over-year deterioration of 43.5%. Further, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year decline of 13%.

Factors at Play

Magna has been battling chip crunch-related headwinds, which are expected to weigh on first-quarter 2022 results. As a result of semiconductor chip shortages, the production schedules of Magna’s customers’ have been unpredictable, resulting in labor and other operational inefficiencies at its facilities. Global light vehicle production for the first quarter declined 4% year over year. This is anticipated to have reduced the demand for Magna's products during the quarter to be reported, thereby resulting in lower year-over-year revenues across all segments.

The Zacks Consensus Estimate for fourth-quarter revenues and adjusted EBIT from the Body Exteriors & Structures segment is pegged at $3,686 million and $204 million, implying a year-over-year decline of 8.4% and 37.6%, respectively.

The consensus estimate for quarterly revenues and pretax profit from the Complete Vehicles segment stands at $1,427 million and $42.70 million, indicating a decline of 22.8% and 46.6%, respectively, on a year-over-year basis.

The Zacks Consensus Estimate for quarterly revenues and adjusted EBIT from the Seating Systems unit is pegged at $1,239 million and $40.28 million, indicating a decrease of 5% and 26.7%, respectively, from a year ago.

The consensus mark for revenues and adjusted EBIT from the Power & Vision unit is pegged at $2,740 million and $106 million, pointing to a year-over-year deterioration of 13.2% and 64.3%, respectively.

Magna’s upcoming results are likely to have been negatively impacted by inflationary cost increases in production inputs including freight, labor and commodities. Elevated capital spending to evolve its business profile for incorporating technologically-advanced new products might have further impaired Magna’s quarterly performance.

Earnings Whispers

Our proven Zacks 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. That is not the case here as elaborated below.

Earnings ESP: The company has an Earnings ESP of -0.40%. This is because the Most Accurate Estimate is pegged a penny below 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 currently carries a Zacks Rank of 4 (Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

While an earnings beat looks uncertain for Magna, below we highlight three stocks from the auto space, which, according to our model, have the right combination of elements to surpass earnings estimates for the quarter to be reported:

Cummins (CMI - Free Report) has an Earnings ESP of +1.68% and a Zacks Rank #3. The company is set to report first-quarter 2022 earnings on May 3.

The Zacks Consensus Estimate for Cummins’ to-be-reported quarter’s earnings and revenues is pegged at $3.55 per share and $6.02 billion, respectively. CMI surpassed earnings estimates in two of the last four quarters for as many misses, with an average surprise of 0.5%.

Custom Truck One Source (CTOS - Free Report) has an Earnings ESP of +30.77% and a Zacks Rank #3. The company is set to report first-quarter 2022 earnings on May 10.

The Zacks Consensus Estimate for the bottom and top lines of Custom Truck is pegged at a loss of 4 cents per share and $322 million, respectively. CTOS surpassed earnings estimates in two of the last four quarters for as many misses, with an average surprise of 12%.

LCI Industries (LCII - Free Report) has an Earnings ESP of +12.72% and a Zacks Rank #3. The company is set to report first-quarter 2022 earnings on May 10.

The Zacks Consensus Estimate for Cummins’ to-be-reported quarter’s earnings and revenues is pegged at $4.48 per share and $1.30 billion, respectively. LCI surpassed earnings estimates in three of the last four quarters and missed on the other, with an average surprise of 12.8%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar