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Magna Retained at Outperform

Zacks Equity Research

On Feb 7, 2014, we maintained our Outperform recommendation on Magna International Inc. (MGA) based on improved third-quarter 2013 results and benefits from global expansion.

Why the Reiteration?

On Nov 6, 2013, Magna International reported adjusted earnings per share of $1.53 for third-quarter 2013, a 35.4% improvement from $1.13 recorded in the year-ago quarter. The figure also outpaced the Zacks Consensus Estimate of $1.33 per share.

Revenues rose 12.5% to $8.34 billion in the reported quarter, beating the Zacks Consensus Estimate of $8.26 billion. The rise was driven by improvement in North American, European and Rest of World (:ROW) production sales and higher tooling, engineering and Complete Vehicle Assembly sales.

Following the release of the third-quarter results, the Zacks Consensus Estimate for Magna’s full-year 2013 earnings increased 1.4% to $6.42 per share. The Zacks Consensus Estimate for 2014 rose 2.1% to $7.78 per share. Currently, Magna carries a Zacks Rank #2 (Buy).

Magna International expects year-over-year increase in revenues to $33.9–$34.8 billion in 2013. For fiscal 2014, total revenue of the company is expected in the $33.8–$35.5 billion range. For fiscal 2016, Magna expects total production sales to be $3.6 billion higher than in 2014.

Magna is poised to benefit from the establishment of a powertrain facility in China, a seat component plant in Serbia and a firm in Turkey. The company also focuses on providing high quality products. 11 of Magna’s divisions across four countries received Supplier Quality Excellence Awards from General Motors for demonstrating high quality performance over the past 12 months.

Other Stocks to Consider

Other stocks that are performing well include STRATTEC Security Corporation (STRT), Gentex Corp. (GNTX) and Oshkosh Corp. (OSK). STRATTEC Security and Gentex carry a Zacks Rank #1 (Strong Buy) while Oshkosh is a Zacks Rank #2 stock.

Read the Full Research Report on MGA
Read the Full Research Report on OSK
Read the Full Research Report on GNTX
Read the Full Research Report on STRT

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