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Magna (MGA) Up 4.9% Since Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Magna International Inc. (MGA - Free Report) . Shares have added about 4.9% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is MGA due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Magna Q1 Earnings & Revenues Beat Estimates, Rise Y/Y

Magna International reported adjusted earnings per share of $1.84, surpassing the Zacks Consensus Estimate of $1.66 and the year-ago figure of $1.53.

Revenues increased 21% year over year to $10.79 billion. The top line also surpassed the Zacks Consensus Estimate of $10 billion. The rise in sales is primarily owing to growth across all its operating segments.

Moreover, the company reported a 16% increase in adjusted EBIT to $875 million from the year-ago figure of $818 million.

Segment Performances

Revenues at the Body Exteriors & Structures segment was $4.6 billion in the reported quarter compared with $4.17 billion recorded in first-quarter 2017. However, adjusted EBIT declined 9% year over year to $340 million.

Revenues at the Power & Vision segment totaled $3.2 billion in comparison with $2.9 billion recorded in the prior-year quarter. Adjusted EBIT gained 30% year over year to $358 million.

Revenues at the Seating Systems segment totaled $1.47 billion compared with $1.34 billion recorded in the prior-year quarter. Adjusted EBIT rose 14% year over year to $130 million.

Revenues from the Complete Vehicles segment increased to $1.66 billion in the quarter under review from $527 million in first-quarter 2017. Adjusted EBIT mounted 9% year over year to $28 million.

Financials

Magna International had $769 million of cash and cash equivalents as of Mar 31, 2018, compared with $726 million as of Dec 31, 2017. The company had long-term debt of $3.2 billion as of Mar 31, 2018, almost in line with the figure recorded on Dec 31, 2017.

At the end of first-quarter 2018, Magna International’s cash flow from operations was $577 million in comparison with $457 million recorded in the first quarter of the prior year.

Capital Deployment

The company’s board of directors has announced a quarterly dividend of 33 cents per share for the first quarter. This dividend is payable on Jun 8, 2018, to shareholders of record as of May 25, 2018.

During the reported quarter, Magna International repurchased 1.9 million shares for $103 million.

2018 Outlook

For full-year 2018, the company expects light-vehicle production in North America to be around 17.3 million units, a decline from the previous anticipation of 17.4 million. For Europe, it is expected to be 22.6 million units against the prior expectation of 22.3-22.4 million.

Moreover, Magna International anticipates total sales of $40.9-$43.1 billion compared with the prior expectation of $39.3-$41.5 billion. The anticipation for total sales includes projected sales of Complete Vehicle, Body Exteriors & Structures, Power & Vision and Seating Systems, each in the band of $17.3-$18.1 billion, $12.3-$12.9 billion, $5.5-$5.9 billion and $6.4-$6.8 billion, respectively.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. There have been three revisions higher for the current quarter compared to two lower.

Magna International Inc. Price and Consensus

 

VGM Scores

At this time, MGA has a nice Growth Score of B, though it is lagging a bit on the momentum front with a C. However, 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.

Based on our scores the stock is primarily suitable for value investors while also being suitable for those looking for growth and to a lesser degree momentum.

Outlook

Estimates have been broadly trending upward for the stock and the magnitude of these revisions indicates a downward shift. It comes with little surprise MGA has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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