- Price
- $65.99
- Fair value
- $80.00
- Discount
- 17.5%
- Uncertainty
- High
- LSEG rating
- 2.52
- Moat
- None
- Next earnings
- 2026-11-02
- Next earnings is estimate
- Yes
- Company name
- Magna International
- Sector
- Auto parts
- About
- Magna International is one of the largest suppliers of auto parts in the world. It is based in Aurora, Ontario, and its shares trade on the Toronto Stock Exchange and the New York Stock Exchange. It has four segments. Body Exteriors & Structures makes vehicle bodies, chassis, bumpers and other exterior parts. Power & Vision makes powertrain, electronics, driver assistance and mechatronics products. Seating Systems makes complete seats. Complete Vehicles builds whole vehicles for car makers under contract, mainly in Graz, Austria, and also gives engineering services. In 2026, it sold its European Lighting and its Rooftop Systems businesses. Magna expects 2026 sales of $41.3 billion to $42.5 billion.
- Thesis
- The market prices Magna for the risks of the auto cycle. Global light vehicle production fell 2% in Q2 2026, with lower production in North America, Europe and China. Tariffs, price concessions to car makers and the end of some programs put pressure on sales and margins, and the Complete Vehicles business depends on a few contracts. Investors fear that car makers produce fewer vehicles in 2027 and that Magna cannot keep its recent margin gains. For the gap to close, three things must be true. Magna must reach its raised 2026 outlook of an Adjusted EBIT margin of 6.3% to 6.6% and free cash flow of $1.75 billion to $1.85 billion. It must recover most tariff costs from its customers. Its 2027 outlook, which it usually gives in February, must show further margin growth even if vehicle production stays flat. The Q3 2026 report, expected in early November 2026, and the 2027 outlook in February 2027 give the next evidence. If these checks pass, the gap can close over the next three to five quarters. The main reason it may not close is a fall in vehicle production, which lowers volume and margins at the same time.
- Risks
- Magna's sales depend on how many vehicles car makers build. Lower production in North America, Europe or China lowers volume and margins.
Tariffs raise costs. Magna recovered tariff costs from customers in Q2 2026, but if recoveries are late or smaller, margins fall.
Car makers ask for price concessions every year, and some programs end. Magna must win new programs and cut costs to keep its margins.
Complete vehicle assembly depends on a few contracts. Lower assembly volumes and lower engineering revenue reduced sales in the first half of 2026.
- Balance sheet
- Cash: $1.5B
Debt: $4.6B
Net debt: $3.1B
Undrawn credit line: $3.5B
Debt due within 12 months: $20M
At June 30, 2026, long-term debt was $4.63 billion, of which $20 million was due within one year. Operating lease liabilities were $1.84 billion more. Cash resources, including restricted cash equivalents, were $1.5 billion. Magna had lines of credit of $3.7 billion, of which $3.5 billion was available, including a $2.7 billion facility that matures in June 2031 and an $800 million facility that matures in June 2027. Net interest expense was $37 million in Q2 2026, down from $52 million a year earlier, because of lower debt and higher interest income.
As of 2026-06-30.
- Checkpoints
- Nov 2, 2026 (estimate): Q3 2026 earnings: margin outlook. Pending. Watch: Results that keep the 6.3% to 6.6% Adjusted EBIT margin outlook and the free cash flow outlook pass; a cut to the outlook fails.
Feb 2027 (estimate): 2027 outlook. Pending. Watch: An outlook for a higher Adjusted EBIT margin in 2027 passes; a lower margin outlook because of weak production fails.
- Recent events
- 2026-07-31: Magna reported Q2 2026 results. Sales rose 3% to $11.0 billion, while global light vehicle production fell 2%. Adjusted EBIT rose 16% to $677 million, a margin of 6.2%, and adjusted EPS rose 29% to $1.86. Free cash flow was $617 million. Magna raised its 2026 outlook for the Adjusted EBIT margin to 6.3% to 6.6%, for adjusted EPS to $6.70 to $7.30 and for free cash flow to $1.75 billion to $1.85 billion.
2026-07-31: In Q2 2026, Magna returned $598 million to shareholders. It paid dividends of $133 million and repurchased 7.4 million shares for $465 million. It completed the Lighting and Rooftop Systems divestitures earlier than it expected, and it declared a quarterly dividend of $0.495 per share.
2026-04-22: Magna extended its $800 million 364-day revolving credit facility to June 24, 2027 and its $2.7 billion revolving credit facility to June 25, 2031. No amounts were drawn on either facility at June 30, 2026.