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Magna International Inc MG

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Magna Is an Auto Supplier With Broad Capabilities

David Whiston

Magna International is one of the largest and most diversified auto parts suppliers in the world but that size is no guarantee of economic profit. While breadth in product and services can be advantageous regarding cross-selling—commercial activities that bolster content per vehicle and market penetration—we don’t see margins getting high enough to merit moat worthy return on invested capital due to numerous competitors in Magna’s largest segments. The company enjoys customer switching costs, which are common to auto suppliers with moats, but its financial performance does not quite merit one.

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Price vs Fair Value

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MG is trading at a 856% premium.
Price
CAD 56.84
Fair Value
CAD 18.00
Uncertainty
High
1-Star Price
CAD 475.42
5-Star Price
CAD 88.90
Economic Moat
Clps
Capital Allocation
Cjjlppk

Bulls Say, Bears Say

Bulls

High switching costs often enable sticky market shares for auto suppliers.

Bears

Magna relies heavily on a handful of automakers with its top six customers accounting for 76% of total 2023 revenue. Asian automakers can be hard to gain share with.

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Trading Information

Previous Close Price
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Day Range
—–—
52-Week Range
—–—
Bid/Ask
— / —
Market Cap
—
Volume/Avg
— / —

Key Statistics

Price/Earnings (Normalized)
8.04
Price/Sales
0.28
Dividend Yield (Trailing)
4.49%
Dividend Yield (Forward)
4.51%
Total Yield
4.55%

Company Profile

Magna International prides itself on a highly entrepreneurial culture and a corporate constitution that outlines distribution of profits to various stakeholders. This automotive supplier's product groups include exteriors, interiors, seating, roof systems, body and chassis, powertrain, vision and electronic systems, closure systems, electric vehicle systems, tooling and engineering, and contract vehicle assembly. In 2023, 48% of Magna's $42.8 billion of revenue came from North America while Europe accounted for approximately 38% and Asia the remainder. The firm's top six customers constituted 76% of revenue with the top three being GM, Mercedes, and BMW. GM was the largest contributor at 14%. The company was founded in 1957, has over 179,000 employees, and is based in Aurora, Ontario.
Sector
Consumer Cyclical
Industry
Auto Parts
Stock Style Box
Mid Value
Total Number of Employees
177,000
Website
https://www.magna.com

Competitors

Valuation

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Metric
MG
BWA
ADNT
Price/Earnings (Normalized)
 8.048.7314.68
Price/Book Value
 1.031.341.04
Price/Sales
 0.280.580.14
Price/Cash Flow
 4.375.465.37
Price/Earnings
MG
BWA
ADNT

Financial Strength

Metric
MG
BWA
ADNT
Quick Ratio
 0.741.190.74
Current Ratio
 1.121.621.08
Interest Coverage
 5.1737.381.60
Quick Ratio
MG
BWA
ADNT

Profitability

Metric
MG
BWA
ADNT
Return on Assets (Normalized)
 4.68%6.40%3.56%
Return on Equity (Normalized)
 13.02%15.25%15.49%
Return on Invested Capital (Normalized)
 8.63%9.30%9.37%
Return on Assets
MG
BWA
ADNT

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