Magna International (TSX:MG) earnings are set to come out this first week of November. Yet, it’s likely not one of the top stocks on your radar. I wouldn’t blame you, as Magna stock has had a very difficult few years, and it’s unclear when that could improve.
So let’s look at what investors might consider ahead of Magna stock earnings, and whether it’s now a buy or beware.
First, a history lesson
Magna stock was one of the top stocks going into the pandemic. It offered investors a chance to get in on a diversified automobile company that could have an enormous future in the electric vehicle industry. After all, it creates the parts that vehicles need. That includes both electric vehicles and internal combustion engine vehicles.
It seemed to be going so well, with the company creating partnerships and expanding its commitment to electric vehicles. However, then the pandemic hit, followed by supply-chain issues. Issues that have yet to get back to normal.
In fact, it has hurt the company for years now, with management not convinced it will be fully back to normal for perhaps a few years more. And it’s certainly hurt the company in the short term.
That is, until recently
During Magna stock’s last quarterly earnings, the company flew past earnings estimates. This turnabout is perhaps now showing that the company is finally able to push past the problems of the past, and start delivering on its future promises.
Sales were up 17% year over year, with adjusted diluted earnings per share surging 81% to $1.50. The company completed its Veoneer Active Safety acquisition and raised its 2023 outlook.
This comes from higher production in North America, China, and Europe. With higher production comes higher sales and the ability to launch new programs, according to the company. This improvement was all while foreign exchange remained weak, and so could certainly improve in the near future.
Heading into the future
After the acquisition of Veoneer, the company later came out with an updated outlook for 2025. Vehicle production is now surging far higher than what was anticipated. Sales should surge in the next few years, and billions in revenue and income should be added. Now, the company expects sales of $49.2 billion, up from $46.7 billion!
We could, in fact, see more of these improvements when the next quarter comes in. After all, Magna stock has since made even more acquisitions, along with the introduction of eco-friendly solutions to its materials. This could add even more in revenue and sales, providing investors with even more reason to consider the stock.
So should you buy Magna stock before earnings? The answer, in my opinion, should be a yes. MAG continues to trade at a valuable 15 times earnings and holds a 3.73% dividend yield to boot. That’s enough to consider the stock, in my opinion. But don’t sell it after. This could be a major winner in the next few years, one that could provide income that lasts a lifetime.
