Key Morningstar Metrics for Magna International
- Fair Value Estimate: C$95.00
- Morningstar Rating: ★★★
- Morningstar Economic Moat Rating: None
- Morningstar Uncertainty Rating: High
What We Thought of Magna International’s Earnings
Magna International’s MG fourth-quarter adjusted diluted EPS rose 29% year over year to USD 2.18 and beat the USD 1.79 LSEG consensus. The stock rose over 20% during Feb. 13 trading on the results and the company issuing above-consensus 2026 EPS guidance of USD 6.25-USD 7.25 versus USD 5.99.
Why it matters: Magna’s stock for a while has been held back probably on fears of continued sluggish vehicle production volumes and the company restructuring. 2026 guidance excluding the complete assembly segment calls for organic growth over market of 1%-4%.
- The company’s confidence in a declining market is a good sign, in our view. Management will keep returning cash to shareholders via more buybacks in 2026, and it announced a 2% quarterly dividend increase to USD 0.495 per share, the 16th straight year it has increased.
- Guidance for adjusted EBIT margin of 40-100 basis points above 2025’s 5.6% is from restructuring actions, higher equity income, lower warranty, and program launches. New Ford SUV programs launched in the quarter helped total revenue grow 2% versus a 1% industry production decline.
The bottom line: We are raising our fair value estimate for no-moat Magna to C$95 from C$88. The change is from time value of money and higher revenue and equity income over our five-year explicit forecast period in light of 2026 guidance.
- We see the fourth-quarter results and 2026 guidance as very good news for shareholders as they show management is doing an excellent job controlling what it can control, which is costs and operational processes rather than vehicle production.
- 2026 results will follow a seasonal pattern similar to 2025 with nearly 60% of adjusted EBIT coming in the second half. First-quarter EBIT will be lower than second quarter. Still, first-quarter margins are guided to increase relative to first-quarter 2025’s 3.5%.
