Magna International Inc. MGA delivered adjusted earnings per share of $1.41 in third-quarter 2019, beating the Zacks Consensus Estimate of $1.38, mainly aided by increased revenues at the Seating Systems and Complete Vehicles segment. However, the bottom line declined from the year-ago quarter’s $1.56.
The company’s revenues declined 3% year over year to $9,319 million owing to unfavorable foreign currency translation and divestitures. However, the metric surpassed the Zacks Consensus Estimate of $9,305 million.
Adjusted EBIT declined to $558 million from the year-ago figure of $699 million, thanks to the General Motors strike and net customer price concessions.
Magna International Inc. Price, Consensus and EPS Surprise
Magna International Inc. price-consensus-eps-surprise-chart | Magna International Inc. Quote
Revenues at the Body Exteriors & Structures segment fell 5% year over year to $4 billion in the reported quarter due to lower vehicle production, the General Motors strike, unfavorable foreign currency translation, and net customer price concessions. Adjusted EBIT declined to $306 million from the prior-year quarter’s $326 million, reflecting lower scrap steel recoveries as well as higher commodity, warranty and launch costs.
Revenues at the Power & Vision segment fell to $2.7 billion from the prior-year figure of $2.9 billion, largely due to negative foreign currency translation, lower vehicle production, the GM strike and net customer price concessions. Adjusted EBIT declined to $167 million from $259 million in third-quarter 2018, mainly because of higher engineering and other costs in the company’s ADAS business, and lower equity income.
Revenues at the Seating Systems segment rose to $1,266 million in the quarter under review from the prior-year $1,219 million owing to programs launches and the acquisition of VIZA. Adjusted EBIT declined to $56 million from $69 million recorded in the prior year. The decline was largely due to lower sales at a number of facilities, higher commodity costs, launch costs and operational inefficiencies at the South Carolina facility.
Revenues at the Complete Vehicles segment rose 9% year over year to $1.5 billion, primarily driven by the launches of BMW Z4 and Toyota Supra programs as well as continued ramp-up of the Mercedes G-Class and Jaguar I-PACE. Adjusted EBIT grew to $29 million from $24 million in third-quarter 2018 on higher sales, and lower launch and other costs.
Magna had $769 million of cash and cash equivalents as of Sep 30, 2019, compared with $684 million as of Dec 31, 2018. It had long-term debt of $3,021 million as of Sep 30, 2019, reflecting a decline from $3,084 million recorded as of Dec 31, 2018. The debt-to-capital ratio stands at 21.19%, as of Sep 30, 2019.
At the end of third-quarter 2019, the company’s cash flow from operations was $750 million, in comparison with $1.08 billion at the end of third-quarter 2018.
Share Buyback & Dividend
During the September-end quarter, the company repurchased 6.8 million shares of common stock for $342 million.
Magna’s board of directors announced a dividend of 36.5 cents per share for the third quarter of 2019, reaching the total to $109 million.
For 2019, the company projects consolidated revenues in the range of $38.7-$39.8 billion, down from previously mentioned $38.9-$41.1 billion.
The company anticipates adjusted EBIT margin of 6.3-6.5%, reflecting a drop from the prior guidance of 6.6-6.9%.
Magna’s free cash flow expectations remain at the range of $1.9-$2.1 billion despite the lowering of the consolidated sales and margins projections for 2019.
Zacks Rank & Stocks to Consider
Currently, Magna has a Zacks Rank #3 (Hold).
A few better-ranked stocks in the Auto-Tires-Trucks sector are Spartan Motors, Inc. SPAR, SPX Corporation SPXC and BRP Inc. DOOO, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Spartan Motors has an estimated earnings growth rate of 85.42% for the ongoing year. The company’s shares have surged 117.3% in a year’s time.
SPX has an expected earnings growth rate of 23.18% for 2019. The company’s shares have surged 58.5% in the past year.
BRP has a projected earnings growth rate of 18.49% for the current year. Its shares have gained around 21.7% over the past year.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Spartan Motors, Inc. (SPAR) : Free Stock Analysis Report
Magna International Inc. (MGA) : Free Stock Analysis Report
SPX Corporation (SPXC) : Free Stock Analysis Report
BRP Inc. (DOOO) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research