Magna International (TSX:MG) will release its latest quarterly earnings report later this week on February 9. As the company gears to report its financial results, most investors seem skeptical about its future growth prospects as macroeconomic challenges continue to keep them on their toes in 2024. This is one of the key reasons why, after ending 2023 with a minor 2.9% gain, MG stock has slipped nearly 2% so far in 2024 to currently trade at $76.82 per share with a market cap of $22 billion.
Despite its recent weakness, Magna stock is usually known for its stability, even amid tough economic environments. Interestingly, despite facing COVID-19-related woes in between, its share prices have yielded positive returns in four out of the previous five years.
But does Magna still have strong fundamentals to keep rallying in the future? Or is it too late to buy Magna stock? Before we look for an answer to these questions, let’s quickly look at what Street analysts are expecting from its upcoming quarterly results.
Street’s expectations from Magna’s fourth-quarter results
Bay Street analysts expect Magna International’s revenue to rise 9.1% YoY (year over year) to US$10.7 billion in the fourth quarter of 2023. Despite worries about economic growth, continued strong vehicle production numbers globally could help it post positive sales growth.
Its continued focus on efficient operations and cost reductions could also be some of the reasons why analysts expect its fourth-quarter earnings to jump even at a higher rate of 63% YoY to US$1.48 per share.
Is it too late to buy Magna stock?
Even as macroeconomic concerns continued to haunt most industrial companies last year, Magna managed to register a strong 14.4% YoY sales growth in the first three quarters of 2023 to US$32.3 billion. Focus on productivity and efficiency improvements and higher customer recoveries net of production input costs drove the Aurora-headquartered company’s adjusted earnings for these nine months up by 28% YoY to US$4.07 per share. Even as the United Auto Workers’ strikes have affected Magna’s financial results in recent quarters, its strong operational performance encouraged the management to raise the company’s full-year 2023 earnings outlook in November.
Apart from its strong financial growth trends, Magna’s diversified product portfolio and large customer base minimize its dependence on any single market or business segment. The company has also increased its focus on innovation and technology in recent years, with a clear emphasis on autonomous driving, electrification, and other smart mobility solutions. I expect these new investments in emerging trends to accelerate its financial growth trends further in the long run.
Moreover, Magna’s strong balance sheet and cash flow generation allow it to continue rewarding its investors with attractive dividends even amid temporary market downturns. At the current market price, MG stock offers a decent 3.3% annualized dividend yield and distributes its dividends every quarter.
Considering all these positive factors, Magna stock could still be a great value buy for long-term income investors, especially after it has fallen around 14% in the last year.
