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Magna (MGA) Q3 Earnings Beat Estimates, Guidance Revised

Magna International MGA reported third-quarter 2023 adjusted earnings of $1.46 per share, which rose 33% on a year-over-year basis and surpassed the Zacks Consensus Estimate of $1.37 per share.

Net sales increased by 15% from the prior-year quarter to $10,688 million, surpassing the Zacks Consensus Estimate of $10,358 million.

Magna International Inc. Price, Consensus and EPS Surprise

Magna International Inc. Price, Consensus and EPS Surprise
Magna International Inc. Price, Consensus and EPS Surprise

Magna International Inc. price-consensus-eps-surprise-chart | Magna International Inc. Quote

Segmental Performance

The Body Exteriors & Structures segment’s revenues were $4,354 million, rising 9.5% year over year and topping our projection of $4,145.4 million on high global light vehicle production, the launch of programs, net strengthening of foreign currencies against the U.S. dollar and customer price increases. The segment reported an adjusted EBIT of $358 million, up from $227 million recorded in the year-ago period and beating our estimate of $281.7 million on better-than-expected sales and operational efficiency.

Power & Vision segment revenues increased 28.6% year over year to $3,745 million, outpacing our forecast of $3,566 million on high global light vehicle production, the launch of programs, net strengthening of foreign currencies against the U.S. dollar and customer price increases. The segmental EBIT soared from $124 million to $221 million. The metric exceeded our estimate of $115.4 million. This can be attributed to higher sales and customer recoveries.

Revenues from the Seating Systems segment increased 18.1% year over year to $1,529 million, surpassing our expectation of $1,364.4 million on high global light vehicle production, the launch of programs and customer price increases. The segmental EBIT jumped from $37 million to $70 million and also breezed past our forecast of $37.1 million thanks to improved productivity and efficiency, including low costs at certain previously underperforming facilities.

The Complete Vehicles segment’s revenues decreased 2.3% year over year to $1,185 million due to an unfavorable program mix and lower assembly volumes, but outpaced our projection of $1,133 million. The segment reported a negative EBIT of $5 million. It fell 107.7% year over year and lagged our estimate of $58.3 million owing to high engineering and other costs related to launching a new assembly business.

Financials

Magna had $1,022 million in cash and cash equivalents as of Sep 30, 2023, down from $1,234 million as of Dec 31, 2022.

Long-term debt, as of Sep 30, 2023, was $4,135 million, up from $2,847 million as of Dec 31, 2022.

In the reported quarter, cash provided from operating activities totaled $797 million, up from the year-ago figure of $238 million.

The company declared a third-quarter dividend of 46 cents per common share, the same as the prior payout. The dividend will be paid on Dec 1, 2023, to shareholders on record as of the close of business on Nov 17, 2023.

Revised Guidance 2023

Magna expects full-year 2023 revenues in the band of $42.1-$43.1 billion compared with the previous guidance of $41.9-$43.5 billion. Adjusted EBIT margin is forecast in the range of 5.1-5.4%, up from the prior guidance of 4.9-5.3%. Capex is estimated at $2.5 billion, the same as the previous guidance.

Zacks Rank & Key Picks

MGA currently carries a Zacks Rank #3 (Hold).

Some top-ranked players in the auto space are Toyota Motor TM, Honda Motor Co., Ltd. HMC and Modine Manufacturing Company MOD, each sporting Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for TM’s 2023 sales and earnings implies year-over-year growth of 10.6% and 30.9%, respectively. The EPS estimates for 2023 and 2024 have increased by 45 cents and 40 cents, respectively, in the past seven days.

The Zacks Consensus Estimate for HMC’s 2023 sales and earnings suggests year-over-year improvements of 7.7% and 31%, respectively. The EPS estimates for 2023 and 2024 have moved up by 9 cents and 24 cents, respectively, in the past 30 days.

The Zacks Consensus Estimate for MOD’s 2023 sales and earnings indicates year-over-year growth of 7.2% and 55.9%, respectively. The EPS estimates for 2023 and 2024 have increased by 16 cents and 9 cents, respectively, in the past seven days.

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Honda Motor Co., Ltd. (HMC) : Free Stock Analysis Report

Magna International Inc. (MGA) : Free Stock Analysis Report

Modine Manufacturing Company (MOD) : Free Stock Analysis Report

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