The Company in a Nutshell
- Considering MG very low payout ratio, future generous dividend increases can be expected.
- Being a leader in its industry, MG built a very strong and reliable relationships with car automakers.
- Many competitors can’t reach MG’s product offering at the moment, opening doors for additional growth.
- Download PDF format (Last reviewed: August 26th 2019)
|PRO Rating||4||Dividend Yield||2.82%|
|Dividend Safety||4||Dividend Growth Since||2011|
|DDM Valuation||22.70%||Dividend Frequency||Quarterly|
Magna International prides itself on a highly entrepreneurial culture and a corporate constitution that outlines distribution of profits to various stakeholders. This automotive supplier’s product groups include exteriors, interiors, seating, roof systems, body and chassis, powertrain, vision and electronic systems, closure systems, electric vehicle systems, tooling and engineering, and contracted vehicle assembly. About half of MG’s revenue comes from North America while Europe provides ≈40%.
|General Information||GE Data|
|Expected Earnings Date||2020-02-21|
|Next ex-dvd date||N/A|
MG is a leader in the auto parts industry, and this serves it well as many manufacturers tend to concentrate their processes with fewer suppliers offering wider product ranges. This is exactly where Magna stands in the market. While MG relies on Detroit automakers for about 50% of its sales, the overall automobile business is looking brighter. Magna has done several partnerships with European manufacturers. Finally, there is a high switching cost for automakers to change manufacturers such as Magna. This makes its niche a highly repetitive and stable market.
|5-Yr Rev. Growth:||8.09%|
|5-Yr EPS Growth:||19.74%|
|5-Yr Div Growth:||21.02%|
Being linked to Detroit automakers could be a great thing and a bad thing at the same time. In the event the US economy would slow down, Magna would be a direct victim. MG is also vulnerable to tariffs and the commercial trade war saga. This creates an interesting buying opportunity right now. Margins are also under pressure as these big players always expect discount on annual repetitive orders. We can see how market concerns can affect the stock price since mid-2018. Expect more volatility going forward.
|Financial Debt to EBITDA (TTM)||1.06|
|Current Ratio (Quarterly)||1.21|
|Free Cash Flow (Quarterly)($B)||0.513|
Dividend Growth Perspective
The dividend yield has remained low over the past 5 years mainly because the stock price surged. Magna pays a USD dividend. Therefore, its dividend graph is hectic in CAD. The company maintained both payout ratio and cash payout ratio at very good levels. More importantly, both metrics are very stable through time making the dividend growth perspectives even better for the future. Keep in mind MG pays its dividend in USD. Therefore, we used a currency rate of 1.25 to make the conversion in the DDM calculations.
|Payout Ratio (%)||24.47%|
|Cash Payout Ratio (%)||19.43%|
|Enter Expected Dividend Growth Rate Years 1-10:||10.00%|
|Enter Expected Terminal Dividend Growth Rate:||7.00%|
|Calculated Intrinsic Value OUTPUT 15-Cell Matrix||Metric2||Metric3||Metric4|
|Discount Rate (Horizontal)||Discount Rate (Horizontal)||Discount Rate (Horizontal)|
|Margin of Safety||9.00%||10.00%||11.00%|
|Market Cap ($)||21B|
|Price to Book Ratio||1.51|
- Data by Ycharts or Google Finance
- Dividend triangle chart is updated every 6 months.
- All other metrics are updated every 5 minutes (price) or weekly.
- The PDF format includes only comments (no metrics) and are reviewed every 6 months.