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Magna International Announces Specific Buyback of 1.5M Shares

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Magna International Inc. (MGA - Free Report) recently announced a specific buyback program for cancellation of 1,500,000 shares. The buyback is part of the 38,000,000 repurchase program approved earlier. The company also announced that the amended Notice of Intention to Make a Normal Course Issuer Bid has been accepted by the Toronto Stock Exchange.

Per the amendment, the company can repurchase common shares without the security regulatory authorities’ orders related to specific share buyback programs. The specific repurchase program is subject to appropriate regulations along with the leniency allowed by the amendment approved. The company has entered into an agreement with a third party to purchase these shares between Mar 22 and Mar 31.

Per the agreement, Magna International can buy back shares up to 1,500,000 during the specific period but within the daily permissible limit. Magna International is entitled to a purchase price lower than the volume weighted average trading price of the company shares on the day of purchase. All shares repurchased by the company under this program have to be cancelled. Moreover, on any given day the third party or its agents are bound to buy the same number of shares in the Canadian market that the company purchases from them.

Shares of Magna International inched almost 0.3% lower to $43.93 on Mar 20.

Magna International has been focused on regular capital deployment in order to enhance shareholder value. Recently, the company’s board of directors raised the quarterly dividend by 10%, marking the eighth consecutive month of dividend hikes. Moreover, in 2016, the company repurchased 22.6 million shares for $913 million. The company’s 38 million shares buyback program, representing roughly 10% of the outstanding common shares, began on Nov 14, 2016 and terminates in a year.

Magna International has underperformed the Zacks categorized Auto/Truck-Original Equipment Market industry in the last year. During the aforesaid period while the stock lost 0.02%, the industry gained 9.8%.

Zacks Rank & Key Picks

Magna International currently carries a Zacks Rank #3 (Hold).

Some better-ranked companies in the auto space include Lear Corporation (LEA - Free Report) , Honda Motor Co., Ltd (HMC - Free Report) and American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) .

Lear sports a Zacks Rank #1 (Strong Buy) and has an expected long-term growth rate of 8.9%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Honda, carrying a Zacks Rank #2 (Buy), has an expected long-term growth rate of 26%.

American Axle, carrying a Zacks Rank #2, has an expected long-term growth rate of 8.1%.

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