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Magna (MGA) Q3 Earnings & Revenues Beat Estimates, Up Y/Y

Zacks

Magna International Inc. MGA reported third-quarter 2017 earnings per share of $1.36, surpassing the Zacks Consensus Estimate by a couple of cents. The bottom line also improved 5.4% from $1.29 recorded in the same period of 2016.

Revenues increased 7.4% year over year to $9.5 billion. The top line also surpassed the Zacks Consensus Estimate of $9.05 billion. The quarter witnessed a 55% increase in complete vehicle assembly sales, reflecting the launch of BMW 5-Series at its assembly facility in Graz, Austria.

However, the company reported a decrease of 3% in adjusted EBIT to $692 million from the year-ago figure of $715 million.

Magna International, Inc. Price, Consensus and EPS Surprise


Segment Details

Revenues at the External Production segment (comprising North America, Europe, Asia and Rest of World or ROW units) rose 7% year over year to $9.5 billion in the reported quarter.

However, revenues in North America declined 5% to $4.6 billion. While revenues from Europe gained 14% year over year to $2.5 billion, the same from Asia climbed 5% to $576 million. The metric from ROW surged 31% to $156 million.

Revenues at the Complete Vehicle Assembly segment totaled $781 million, soaring 55% from $503 million a year ago.

Revenues from the Tooling, Engineering & Other segment increased 35% to $890 million in the quarter under review.

Financials

Magna International had $783 million of cash and cash equivalents as of Sep 30, 2017 compared with $974 million as of Dec 31, 2016. The company had a long-term debt of $3.2 billion as of Sep 30, 2017, up from the Dec 31, 2016 figure of $2.4 billion.

In third-quarter 2017, Magna International’s cash flow from operations was $881 million.

Capital Deployment

The company’s board of directors announced a quarterly dividend of 27.5 cents per share for the third quarter. This dividend is payable on Dec 8, 2017 to shareholders of record as of Nov 24, 2017.

During the quarter, Magna International repurchased 8.7 million shares for $422 million and paid a dividend of $99 million.

Outlook

For 2017, Magna International projects revenues from the total production sales in the range of $31.9-$32.8 billion, slightly up from the prior guidance of $31.5-$32.8 billion. Complete Vehicle Assembly sales are estimated in the band of $3-$3.2 billion, up from the previous guidance of $2.8-$3.1 billion.

Thus, for 2017, the company expects total revenues within $38.3-$39.5 billion, higher than the prior view of $37.7-$39.4 billion. Income tax rate is expected around 25%. Capital expenditures are anticipated to be approximately $1.9 billion, down from the previous expectation of $1.9-$2 billion.

Zacks Rank & Key Picks

Magna International carries a Zacks Rank #3 (Hold). Some better-ranked auto stocks are PACCAR Inc. PCAR, Allison Transmission Holdings, Inc. ALSN and BorgWarner Inc. BWA. While PACCAR and Allison Transmission sport a Zacks Rank#1 (Strong Buy), BorgWarner carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PACCAR has an expected long-term growth rate of 10%.

Allison Transmission has an expected long-term growth rate of 10%.

BorgWarner has an expected long-term growth rate of 9.1%.

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