Magna Shares Fall 7.9% Since Q2 Earnings Miss Estimates

Shares of Magna International MGA have lost 7.9% since the company reported second-quarter 2024 results. The auto equipment provider reported adjusted earnings of $1.35 per share, which declined from the year-ago quarter's $1.50 and missed the Zacks Consensus Estimate of $1.46.

Net sales remained flat year over year at $11 billion and missed the Zacks Consensus Estimate of $11.11 billion.

Segmental Performance

The Body Exteriors & Structures segment's revenues were $4.47 billion, down 2% year over year. This can be attributed to the end of production of certain programs, the weakening of foreign currencies against the U.S. dollar and customer price concessions. Revenues also lagged the Zacks Consensus Estimate of $4.59 billion. The segment reported an adjusted EBIT of $341 million, down from $394 million recorded in the year-ago period. The metric also missed the Zacks Consensus Estimate of $371 million because of higher production input costs net of customer recoveries, reduced earnings on lower sales and higher supply chain and restructuring costs.

The Power & Vision segment's revenues increased 13.4% year over year to $3.93 billion on higher production on certain programs, smart pricing, the launch of new programs and benefits from acquisitions. The metric, however, missed the Zacks Consensus Estimate of $3.96 billion. Segmental adjusted EBIT rose from $124 million to $198 million due to an increase in earnings on higher sales and lower engineering costs. The metric, however, missed the Zacks Consensus Estimate of $214 million.

Revenues from the Seating Systems segment fell 9.2% year over year to $1.46 billion and missed the Zacks Consensus Estimate of $1.51 billion on customer price concessions, the end of production of certain programs and net weakening of foreign currencies against the U.S. dollar. Segmental adjusted EBIT fell from $67 million to $53 million due to reduced earnings on lower sales. The metric, however, surpassed the Zacks Consensus Estimate of $52 million.

The Complete Vehicles segment's revenues decreased 18.6% year over year to $1.24 billion and missed the Zacks Consensus Estimate of $1.26 billion due to lower assembly volumes. The segment reported an adjusted EBIT of $20 million, which fell from the $34 million reported in the year-ago period but outpaced the Zacks Consensus Estimate of $5.55 million.

Financials

Magna had $999 million in cash and cash equivalents as of Jun 30, 2024, down from $1.2 billion as of Dec 31, 2023. As of Jun 30, 2024, long-term debt was $4.86 billion, up from $4.18 billion as of Dec 31, 2023.

In the reported quarter, cash provided from operating activities totaled $736 million, up from the year-ago figure of $547 million.

The company declared a second-quarter dividend of 47.5 cents per common share. The dividend will be paid on Aug 30, 2024, to shareholders of record as of Aug 16, 2024.

Updated 2024 View

Magna has revised its full-year projections. It now expects 2024 revenues in the band of $42.5-$44.1 billion, down from $42.6-$44.2 billion guided earlier. Adjusted EBIT margin is now projected in the band of 5.4-5.8%, down from the earlier estimate of 5.4-6%. Adjusted net income is estimated between $1.5 billion and $1.7 billion. Capex is projected in the band of $2.3-$2.4 billion, down from the previous estimate of $2.4-$2.5 billion.

Zacks Rank & Key Picks

MGA currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the auto space are Dorman Products, Inc. DORM, BYD Company Limited BYDDY and Douglas Dynamics, Inc. PLOW, each sporting a Zacks Rank #1 (Strong Buy) at present.

The consensus estimate for DORM's 2024 sales and earnings suggests a year-over-year growth of 3.71% and 35.46%, respectively. EPS estimates for 2024 and 2025 have improved 4 cents each in the past seven days.

The Zacks Consensus Estimate for BYDDY's 2024 sales and earnings suggests year-over-year growth of 21.11% and 14.73%, respectively. EPS estimates for 2024 and 2025 have improved 14 cents and 19 cents, respectively, in the past 30 days.

The Zacks Consensus Estimate for PLOW's 2024 sales and earnings suggests year-over-year growth of 6.45% and 60.4%, respectively. EPS estimates for 2024 and 2025 have improved 15 cents and 2 cents, respectively, in the past 30 days.

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