Why Auto Parts Supplier Magna International's Shares Are Surging Today

Magna International, Inc. MGA reported third-quarter FY23 sales growth of 15% year-on-year to $10.688 billion, beating the analyst consensus of $10.33 billion.

Adjusted EPS of $1.46 beat the analyst consensus of $1.34.

Adjusted EBIT increased to $615 million in Q3 compared to $452 million Y/Y. The margin expanded to 5.8% from 4.9%.

Global light vehicle production increased by 4%, including 7% and 14% higher production in North America and Europe, respectively, and 2% lower production in China.

The company said its ongoing focus on operational excellence and cost initiatives helped drive strong earnings on higher sales.

Income from operations before income taxes increased to $538 million in Q3, compared to $400 million Y/Y.

Body Exteriors & Structures segment sales increased 9.5% Y/Y, Power & Vision grew 28.6%, Seating Systems jumped 18%, and Complete Vehicles sales fell 2.3%.

In Q3, the company generated cash from operations before changes in operating assets and liabilities of $797 million and used $24 million in operating assets and liabilities.

Investment activities for the third quarter of 2023 included $630 million in fixed asset additions and $176 million in investments.

Outlook: Magna revised its FY23 sales outlook to $42.1 billion - $43.1 billion from $41.9 billion-$43.5 billion (versus the estimate of $42.61 billion). 

Magna raised FY23 adjusted EBIT margin outlook to 5.1% - 5.4% from 4.9% - 5.3%.

Price Action: MGA shares are trading higher by 14.6% at $56.21 on Friday.