Magna International Inc (NYSE: MGA)

Sector: Consumer Cyclical Industry: Auto Parts CIK: 0000749098
Market Cap 18.84 Bn
P/B 1.51
P/E 22.73
P/S 0.45
ROIC (Qtr) -0.06
Div Yield % 2.18
Rev 1y % (Qtr) 2.07
Total Debt (Qtr) 6.69 Bn
Debt/Equity (Qtr) 0.54
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About

Investment thesis

Bull case

  • Strong operating cash flow of 3.60B provides robust 0.54x coverage of total debt 6.69B, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 1.61B provide 4.54x coverage of short-term debt 355M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 28.41B provides 4.25x coverage of total debt 6.69B, indicating robust asset backing and low credit risk.
  • Operating cash flow of 3.60B provides exceptional 17.22x coverage of interest expenses 209M, showing strong debt service capability.
  • Operating cash flow of 3.60B provides exceptional 66.63x coverage of minority interest expenses 54M, showing strong core operations.

Bear case

  • Operating cash flow of 3.60B barely covers its investment activities of (1.70B), with a coverage ratio of -2.12, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 3.60B provides thin coverage of dividend payments of (544M) with a -6.61 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 2.29B represents just -3.43x of debt issuance (667M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Cash position of 1.61B provides weak coverage of payables of 6.89B, which is 0.23x, indicating potential working capital stress and supplier relationship risks.
  • Retained earnings of 9.77B provide limited buffer against comprehensive income items of (766M), which is -12.75x, indicating elevated exposure to market risks.

Peer comparison

Companies in the Auto Parts
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ORLY O Reilly Automotive Inc 79.05 Bn 31.82 4.53 8.40 Bn
2 AZO Autozone Inc 62.61 Bn 25.41 3.25 12.05 Bn
3 ALSN Allison Transmission Holdings Inc 21.28 Bn 43.99 10.65 2.40 Bn
4 MGA Magna International Inc 18.84 Bn 22.73 0.45 6.69 Bn
5 GPC Genuine Parts Co 18.74 Bn 27.28 1.22 6.40 Bn
6 APTV Aptiv PLC 18.21 Bn 110.36 0.89 7.95 Bn
7 BWA Borgwarner Inc 13.42 Bn 48.46 0.94 3.90 Bn
8 MOD Modine Manufacturing Co 11.46 Bn 117.21 3.99 0.62 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.80 1.25
EV to Cash from Ops. EV/CFO 6.95 14.01
EV to Debt EV to Debt 3.74 36.85
EV to EBIT EV/EBIT 17.08 21.23
EV to EBITDA EV/EBITDA 15.13 9.40
EV to Free Cash Flow [EV/FCF] EV/FCF 10.94 -2.78
EV to Market Cap EV to Market Cap 1.33 1.79
EV to Revenue EV/Rev 0.59 3.03
Price to Book Value [P/B] P/B 1.51 0.00
Price to Earnings [P/E] P/E 22.73 12.66
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.52 1.87
Dividend Payout Ratio % Div Payout % (Qtr) 49.50 13.37
Dividend per Basic Share Div per Share (Qtr) 1.46 0.42
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 17.94 14.12
Interest Coverage Int. cover (Qtr) 7.00 -114.22
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 37.36 -15.53
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 29.27 20.52
Dividend Growth (1y) % Div 1y % (Qtr) -23.42 2.88
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -16.29 35.51
EBITDA Growth (1y) % EBITDA Growth (1y) % 0.00 -1.89
EBIT Growth (1y) % EBIT 1y % (Qtr) -12.18 -6.91
EBT Growth (1y) % EBT 1y % (Qtr) -13.81 -105.73
EPS Growth (1y) % EPS 1y % (Qtr) -16.48 -467.53
FCF Growth (1y) % FCF 1y % (Qtr) 48.57 15.37
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 3.28 23.99
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.34 0.92
Cash Payout Ratio Cash Payout (Qtr) 0.11 0.08
Cash Ratio Cash Ratio (Qtr) 0.15 0.72
Current Ratio Curr Ratio (Qtr) 1.25 2.95
Debt to Equity Ratio Debt/Equity (Qtr) 0.54 0.09
Interest Cover Ratio Int Coverage (Qtr) 7.00 -114.22
Times Interest Earned Times Interest Earned (Qtr) 7.00 -114.22
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % 0.00 -988.62
EBIT Margin % EBIT Margin % (Qtr) 3.48 -1,028.09
EBT Margin % EBT Margin % (Qtr) 2.99 -1,019.44
Gross Margin % Gross Margin % (Qtr) 14.30 -124.68
Net Profit Margin % Net Margin % (Qtr) 2.00 -1,011.37