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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. Magna International's Q3 2025 Earnings: A Strong Beat with Improved Outlook

Magna International's third-quarter 2025 results exceeded expectations, with sales growing 2% to $10.5 billion, adjusted EBIT increasing 3% to $613 million, and adjusted diluted EPS rising 4%. The actual EPS came out at $1.86, beating estimates of $1.77. Free cash flow improved by nearly $400 million to $572 million. The company raised its full-year outlook, expecting higher sales, adjusted EBIT margin, and net income.

Publication Date: Nov -16

📋 Highlights
  • Q3 2025 Outperformed Expectations:: Sales rose 2% to $10.5B, adjusted EBIT increased 3% to $613M, and adjusted diluted EPS climbed 4%, with free cash flow surging $400M to $572M.
  • Full-Year Outlook Raised:: Free cash flow guidance lifted $200M to $1.0–1.2B, with seating sales up 10%, new China OEM wins driving volume, and a $10% share buyback authorized.
  • Capital Discipline and Leverage Target:: CapEx cut to $1.5B, leverage ratio target below 1.7 by year-end, $4.7B liquidity, and tariff impacts capped at <10 bps to 2025 EBIT margin.
  • 2026 Margin Expansion:: 35–40 bps improvement expected from operational efficiencies, building on 5.5% midpoint in 2025, with $40M+ recovery impact in Q4 2025.
  • China Expansion and Strategic Launches:: Magna Steyr secured XPENG and another Chinese OEM with ~100K–120K annual units, while 2026 launches aim for material revenue growth and mid-2s to 3% EBIT margin in complete vehicles.

Operational Highlights

Key highlights include a 10% increase in seating sales, new business wins with China-based OEMs, and a $200 million increase in free cash flow outlook to $1.0-1.2 billion. The company has reduced its capital spending outlook to approximately $1.5 billion and aims to reduce its leverage ratio to below 1.7 by year-end. Tariff impacts are expected to be less than a 10 basis point headwind to 2025 adjusted EBIT margin.

Balance Sheet and Capital Allocation

Magna's balance sheet remains strong, with $4.7 billion in total liquidity and low single A investment-grade ratings. The company has approved a new normal course issuer bid to repurchase up to 10% of its public float. Share buybacks remain an essential part of the company's capital allocation strategy.

Outlook and Guidance

The company expects to see improvements in operating margins in 2026, with 35 to 40 basis points of improvement expected, building on the 5.5% midpoint of the range for 2025. The guidance implies a large step-up in margins in the fourth quarter, driven by operational activities, tariff and commercial recoveries, and a strong Q3.

Valuation and Metrics

With a P/E Ratio of 13.44 and an EV/EBITDA of 5.26, Magna International's valuation appears reasonable. The company's ROIC is 4.95%, and ROE is 8.52%. Analysts estimate next year's revenue growth at 1.2%. The current valuation metrics suggest that the market has priced in a moderate growth outlook for the company.

Business Prospects

The company has new nameplates at Magna Steyr, including XPENG and another Chinese OEM, which could translate to future volumes of around 100,000 to 120,000 units per year. The complete vehicles business is expected to operate at a comfortable level of 100,000-120,000 units, with a normalized EBIT margin of mid-2s to 3%. The ADAS business is experiencing some industry dynamics, with OEMs evaluating architectures, but growth is expected to be a little dampened.

3. NewsRoom

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Magna International Inc. (MGA): A Bull Case Theory

Dec -04

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Magna International Valuation in Focus After Electric Vehicle Investment News and 15% Price Gain

Nov -29

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Is General Motors (GM) Outperforming Other Auto-Tires-Trucks Stocks This Year?

Nov -27

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Magna (MGA) Is Attractively Priced Despite Fast-paced Momentum

Nov -27

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TSX at New High With Industrials, Miners, The Best Performers, Energy Down

Nov -25

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GAC Accelerates European EV Strategy with Magna Vehicle Assembly Program

Nov -21

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Magna International (TSX:MG): Is the Stock Still Undervalued After Its Recent Recovery?

Nov -20

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MGA vs. RACE: Which Stock Is the Better Value Option?

Nov -19

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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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Magna

A-Score: 6.2/10

Value: 8.1

Growth: 4.0

Quality: 4.3

Yield: 7.0

Momentum: 6.5

Volatility: 7.0

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Growth: 5.2

Quality: 4.6

Yield: 2.0

Momentum: 6.5

Volatility: 8.3

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A-Score: 5.6/10

Value: 7.9

Growth: 5.1

Quality: 4.1

Yield: 5.0

Momentum: 4.0

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A-Score: 5.6/10

Value: 3.7

Growth: 8.0

Quality: 6.5

Yield: 0.0

Momentum: 8.5

Volatility: 6.7

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LKQ

A-Score: 5.4/10

Value: 7.4

Growth: 5.4

Quality: 4.9

Yield: 6.0

Momentum: 2.0

Volatility: 7.0

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A-Score: 5.4/10

Value: 7.3

Growth: 5.6

Quality: 5.4

Yield: 3.0

Momentum: 4.0

Volatility: 7.3

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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

67.83$

Current Price

67.83$

Potential

-0.00%

Expected Cash-Flows