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Magna's (MGA) Q2 Earnings Miss Estimates, Revenues Beat

·4 min read

Magna International MGA reported second-quarter 2022 adjusted earnings of 83 cents per share, which declined 41% on a year-over-year basis. The bottom line also lagged the Zacks Consensus Estimate of 93 cents a share. Lower-than-expected EBIT in the Body Exteriors & Structures, Power & Vision and Seating Systems segments led to the underperformance. In the reported quarter, net sales increased 4% from the prior-year quarter to $9,362 million and surpassed the consensus mark of $8,655 million.

Adjusted EBIT of $358 million in the quarter decreased 36% from the second quarter of 2021 amid chip woes, high input costs, operating efficiencies and other costs incurred at a facility in Europe.

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 in the reported quarter were $3,947 million, inching up 8.2% year over year. The figure also outpaced the consensus mark of $3,780 million. The segment reported an adjusted EBIT of $191 million, down nearly 16% from the year-ago period. The figure lagged the consensus mark of $222 million.

In the reported quarter, the Power & Vision segment revenues nominally edged down 0.2% to $2,888 million from the prior-year figure. The figure topped the consensus mark of $2,792 million. The segmental EBIT registered a 55.2% decline and came at $91 million. It lagged the consensus mark of $111 million.

Revenues in the Seating Systems segment increased 7.5% year over year to $1,253 million in the reported quarter. The figure also topped the consensus mark of $1,244 million. The segment reported an adjusted EBIT of $2 million, plummeting 92% from the corresponding quarter of 2021. The metric significantly lagged the consensus estimate of $37.67 million.

The Complete Vehicles segment’s revenues decreased 5.8% year over year to $1,403 million but topped the consensus mark of $1,332 million. Adjusted EBIT declined 20.3% year over year to $63 million. The metric, however, beat the consensus mark of $50 million.

Financials

Magna had $1,664 million of cash/cash equivalents as of Jun 30, 2022, down from $2,948 million in 2021-end. Long-term debt, as of Jun 30, 2022, was $3,408 million, down from $3,538 million in 2021-end. In the reported quarter, cash provided from operating activities totaled $421 million, declining from the year-ago figure of $528 million.

It repurchased 3.5 million shares for $212 million and paid out dividends of $130 million.  The company declared a second-quarter dividend of 45 cents per common share, payable on Aug 26, 2022, to shareholders on record as of the close of business on Aug 12, 2022.

2022 Guidance

Magna expects full-year 2022 revenues in the band of $37.6-$39.2 billion, up from the previously guided range of $37.3-$38.9 billion. Adjusted EBIT margin is unchanged at 5-5.4%. Capital spending also remains constant at nearly $1.8 billion.

Zacks Rank & Key Picks

MGA carries a Zacks Rank #5 (Strong Sell), currently.

Better-ranked players in the auto space include Genuine Parts Company GPC, LCI Industries LCII and Standard Motor Products SMP, each carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Genuine Parts has an expected earnings growth rate of 15.8% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 1.9% upward in the past 30 days.

Genuine Parts’ earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. GPC pulled off a trailing four-quarter earnings surprise of 11.03%, on average. The stock has risen 20.8% over the past year.

LCI Industries has an expected earnings growth rate of 65.9% for the current year. The Zacks Consensus Estimate for current-year earnings has remained constant in the past 30 days.

LCI Industries’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in one. LCII pulled off a trailing four-quarter earnings surprise of 21.81%, on average. The stock has declined 7.3% in the past year.

Standard Motor has an expected earnings growth rate of 5.2% for the current year. The Zacks Consensus Estimate for current-year earnings has remained constant in the past 30 days.

Standard Motor’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters. SMP pulled off a trailing four-quarter earnings surprise of 40.34%, on average. The stock has risen 8.8% over the past year.


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