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1. Company Snapshot

1.a. Company Description

Magna International Inc.designs, engineers, and manufactures components, assemblies, systems, subsystems, and modules for original equipment manufacturers of vehicles and light trucks worldwide.It operates through four segments: Body Exteriors & Structures, Power & Vision, Seating Systems, and Complete Vehicles.


The Body Exteriors & Structures segment provides body and chassis, exterior, and roof systems, as well as battery enclosures and engineering and testing services, including fascia and trims, front end modules, front integration panels, liftgate modules, active aerodynamics, engineered glass, running boards, truck bed access products, and side doors.The Power & Vision segment offers hybrid and electric drive systems, motors, inverters, onboard chargers, and e-clutch; dedicated hybrid, dual and hybrid dual, and manual transmissions; AWD/4WD products and rear drive modules; transmission, engine, driveline components, engine drive plates, and accessories; engineering services; advanced driver assistance systems and sensors, and electronic control units; interior and exterior mirrors, camera and driver monitoring systems and electronics, actuators, door handles, and overhead consoles; forward, rear, and auxiliary lighting products; latching, door modules, window, power closure, and hinges and wire forming systems; and modular and textile folding roofs, and hard and soft tops.The Seating Systems segment provides seat structures, mechanism and hardware solutions, and foam and trim products.


The Complete Vehicles segment offers vehicle engineering and manufacturing services.The company also designs, engineers, and manufactures tooling products.Magna International Inc.


was founded in 1957 and is headquartered in Aurora, Canada.

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1.b. Last Insights on MG

Negative drivers behind Magna International's recent performance include a disappointing 2025 sales outlook, which fell short of Wall Street's expectations. The company's guidance for 2025 and 2026 was also below consensus, with top-line guidance being a major concern. Additionally, the implementation of tariffs by the U.S. creates significant uncertainty for the industry, with CIBC analyst Krista Friesen viewing it as an "existential threat." Furthermore, the company's 2025 guidance was affected by foreign exchange and original equipment manufacturer (OEM) headwinds.

1.c. Company Highlights

2. Strong Q4 Results and 2026 Outlook Drive Confidence

The company's fourth-quarter sales reached $10,800,000,000, marking a 2% increase from the previous year, while the adjusted EBIT margin improved by 100 basis points to 7.5%. Adjusted EPS came in at $2.18 per share, a 29% increase from the same period last year. For the full year 2025, the company reported $3,600,000,000 in operating cash flow and $1,900,000,000 in free cash flow. The strong operating performance and disciplined capital allocation are expected to continue driving growth in 2026, with weighted sales growth projected at 1.5% above market growth at the midpoint.

Publication Date: Feb -15

📋 Highlights
  • 2025 Operating Cash Flow & Free Cash Flow:: Generated $3.6 billion in operating cash flow and $1.9 billion in free cash flow, driven by operational excellence and efficient cash generation.
  • Q4 Performance Exceeded Expectations:: Fourth-quarter sales rose 2% to $10.8 billion; adjusted EBIT margin expanded 100 bps to 7.5%, and adjusted EPS increased 29% to $2.18.
  • 2026 Free Cash Flow Guidance:: Projects $1.6–$1.8 billion in free cash flow with CapEx below 4% of sales, supporting capital allocation strategy and EPS growth.
  • Operational Excellence Margin Impact:: Delivered 35–40 bps of adjusted EBIT margin expansion in 2026, with scalable benefits from cost optimization and productivity initiatives.
  • Strategic Collaboration & Market Position:: Strengthened partnerships, including with NVIDIA, and secured eDrive programs in China, offsetting Complete Vehicles segment declines and driving growth in Power & Vision.

Operational Excellence Driving Margin Expansion

The company's operational excellence initiatives have been a key driver of margin expansion, with Swamy Kotagiri noting that they are still in the "early innings" of these activities, which are expected to continue delivering benefits in 2026 and beyond. The company has seen improvements in uptime, quality, and throughput, and is working on material optimization, vision-enabled robotics, and automated work instruction pilots.

Segment Performance and Outlook

The company's Power and Vision segment is expected to drive growth in 2026, with significant wins and awards of eDrive programs on China-based OEMs. The Seating segment is anticipated to have a slight dip in 2026 due to program-specific end of production, but is expected to see accretive growth from normal metrics. The Complete Vehicles segment is expected to have a slow year due to the end of production of certain programs.

Valuation and Growth Prospects

With a P/E Ratio of 18.79 and an expected revenue growth rate of 2.2% next year, the company's valuation appears reasonable. The dividend yield of 2.82% and free cash flow yield of 10.51% also suggest that the company is generating strong cash flows. As the company continues to execute on its operational excellence initiatives and drive growth in its key segments, investors may see further upside potential. The actual EPS of $2.97 beating estimates of $1.05 indicates a strong underlying business.

Return Metrics and Leverage

The company's return on equity (ROE) stands at 8.55%, while its return on invested capital (ROIC) is 7.87%. The net debt to EBITDA ratio is 1.58, indicating a manageable level of leverage. These metrics suggest that the company is generating strong returns and has a solid balance sheet to support its growth initiatives.

3. NewsRoom

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Here Are Wednesday’s Top Wall Street Analyst Research Calls: Cadence Design, Crox, Genuine Parts, Kratos Defense, Medtronic, Palantir, StubHub, Transocean, and More

Feb -18

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Magna Stock Revs Nearly 20% In Massive Volume On Earnings; Gets Rating Upgrade

Feb -17

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Magna International Q4 Earnings Surpass Expectations, Dividend Raised

Feb -16

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Magna Results, EV Contracts And AI Partnership Raise Questions On Valuation

Feb -16

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Magna International (MGA) Soars to 4-Year High on Revenue Blowout, Buyback

Feb -14

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This TSX top gainer's 25% leap prompts TD analyst to predict 'upward financial revisions' this year

Feb -13

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Auto Parts Suppliers Rise Thanks To Easing Tariff Headwinds

Feb -13

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UBS Maintains Price Target, Rating on Magna International After Q4 Results, 2026 Outlook

Feb -13

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.90%)

6. Segments

Body Exteriors & Structures

Expected Growth: 10%

Magna International's Body Exteriors & Structures segment is driven by increasing demand for lightweight materials, electrification, and autonomous vehicles. OEMs' focus on reducing emissions and improving fuel efficiency fuels growth. Additionally, rising adoption of advanced driver-assistance systems (ADAS) and sensor technologies boosts demand for specialized body structures. These trends, combined with Magna's innovative products and strong OEM relationships, support a 10% growth rate.

Power & Vision

Expected Growth: 12%

Magna International's Power & Vision segment growth is driven by increasing demand for electrification, autonomous driving, and advanced driver-assistance systems (ADAS). The rising adoption of electric vehicles, growth in sensor and camera technologies, and increasing focus on safety and convenience features are key contributors to this 12% growth.

Seating Systems

Expected Growth: 9%

Magna International's Seating Systems segment growth is driven by increasing demand for comfort and safety features in vehicles, rising adoption of autonomous and electric vehicles, and growing popularity of premium and luxury vehicles. Additionally, the company's strategic partnerships and investments in innovative technologies, such as 3D printing and smart seating systems, are contributing to its growth.

Complete Vehicles

Expected Growth: 13%

Magna International's Complete Vehicles segment growth of 13% is driven by increasing demand for electrified powertrains, rising adoption of autonomous driving technologies, and growing partnerships with OEMs. Additionally, the company's expansion into new markets, such as China, and its focus on lightweighting and sustainability solutions also contribute to the segment's growth.

Corporate & Other

Expected Growth: 8%

Magna International's Corporate & Other segment growth of 8% is driven by increasing investments in electrification and autonomous driving technologies, as well as growing demand for its advanced driver-assistance systems and electrified powertrains. Additionally, the company's strategic acquisitions and partnerships have expanded its capabilities and diversified its revenue streams.

7. Detailed Products

Body and Chassis Systems

Magna International Inc. provides a wide range of body and chassis systems, including doors, hoods, trunk lids, and roof systems.

Seating Systems

Magna International Inc. offers a comprehensive range of seating systems, including seats, mechanisms, and trim components.

Vision Systems

Magna International Inc. provides advanced vision systems, including mirrors, cameras, and sensor systems.

Power and Vision Technologies

Magna International Inc. offers a range of power and vision technologies, including electric motors, power electronics, and advanced driver-assistance systems (ADAS).

Electric Vehicle Systems

Magna International Inc. provides comprehensive electric vehicle systems, including electric motors, power electronics, and battery systems.

Lighting Systems

Magna International Inc. offers a range of lighting systems, including exterior and interior lighting, LED lighting, and adaptive lighting systems.

Engine and Transmission Systems

Magna International Inc. provides a range of engine and transmission systems, including gasoline and diesel engines, transmissions, and driveline components.

8. Magna International Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Magna International Inc. operates in the automotive industry, which has a moderate threat of substitutes. While there are alternative modes of transportation, the demand for vehicles is still high, and the company's diversified product portfolio helps mitigate the threat.

Bargaining Power Of Customers

Magna International Inc. has a diverse customer base, including major automotive manufacturers. While customers have some bargaining power, the company's strong relationships and diversified product offerings reduce the threat.

Bargaining Power Of Suppliers

Magna International Inc. relies on a network of suppliers for raw materials and components. While suppliers have some bargaining power, the company's scale and diversified supply chain mitigate the threat.

Threat Of New Entrants

The automotive industry has high barriers to entry, including significant capital requirements and regulatory hurdles. This limits the threat of new entrants and provides a competitive advantage to established players like Magna International Inc.

Intensity Of Rivalry

The automotive industry is highly competitive, with many established players competing for market share. Magna International Inc. faces intense rivalry from other suppliers and manufacturers, which can lead to pricing pressure and reduced margins.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 37.80%
Debt Cost 4.18%
Equity Weight 62.20%
Equity Cost 12.40%
WACC 9.29%
Leverage 60.78%

11. Quality Control: Magna International Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

87.68$

Current Price

87.69$

Potential

-0.00%

Expected Cash-Flows