Magna International (TSX:MG) is no stranger to the spotlight in the Canadian investing world. With operations in more than two dozen countries and deep relationships across the global automotive industry, it’s long been seen as one of Canada’s industrial champions. But over the past year, the Canadian stock has taken a hit. It’s now down around 30% from its recent highs, and investors are asking the obvious question: is this the perfect time to buy and hold?
Looking at numbers
Magna’s first-quarter earnings for 2025 were mixed but also offered hints of long-term strength. The Canadian stock reported US$10.1 billion in sales, which was down 8% year over year. Adjusted diluted earnings per share (EPS) came in at US$0.78, a noticeable decline from the US$1.08 it posted in the same period last year. Management pointed to a 3% dip in global light vehicle production and added costs tied to ongoing geopolitical tensions and tariffs. European and North American operations were especially affected, dragging on overall performance.
However, these aren’t permanent issues. Vehicle production tends to move in cycles, and macroeconomic factors like tariffs can shift quickly with trade negotiations. Importantly, Magna remains highly profitable and continues to produce positive cash flow. In fact, the Canadian stock returned US$187 million to shareholders in the first quarter (Q1) of 2025 through dividends and share buybacks. It also increased its quarterly dividend to US$0.485 per share. That’s a clear signal that management believes in its long-term strength, even as it trims short-term costs to weather the storm.
Analyst optimism
The Canadian stock’s recent drop hasn’t scared off analysts. If anything, it’s catching their attention. One analyst recently maintained a “buy” rating on the stock even after trimming its price target from US$47 to US$44. Now, analysts see the dip as more of a temporary speed bump than a sign of deeper trouble. The consensus among analysts is that Magna has solid fundamentals and is well-positioned to bounce back as global auto production recovers.
One reason for that optimism is Magna’s strong positioning in the transition to electric vehicles (EVs). As legacy automakers shift away from internal combustion engines, companies like Magna, known for supplying everything from powertrains and seating systems to high-tech driver assistance features, stand to benefit. In Q1, Magna noted that over 40% of its US$12.8 billion backlog is tied to zero-emission vehicles. That includes contracts for both battery electric and fuel-cell vehicles. If global EV adoption keeps climbing, Magna could become an even more important supplier across the board.
Showing strength
Magna is also making strategic moves to cut costs and protect margins. With U.S. tariffs putting pressure on pricing, the Canadian stock has begun realigning operations to avoid inefficiencies and reduce exposure. It’s also investing in automation and advanced manufacturing technologies that should improve profitability over time. While these investments can be expensive upfront, they help make Magna a more competitive and agile player in a fast-changing industry.
For investors, the appeal of Magna today lies in its mix of reliability and transformation potential. This isn’t a flashy startup chasing the next tech trend. It’s a proven manufacturer with a global presence, deep ties to automakers, and a commitment to shareholder value. Its dividend yield is currently attractive, and its payout history shows a clear desire to reward long-term investors. When combined with the upside potential of its EV and autonomous vehicle initiatives, the case for a long-term hold becomes clear.
Bottom line
There’s no guarantee when Magna’s stock will rebound. It might take another quarter or two for auto production to fully stabilize or for supply chain costs to normalize. However, at current prices, Canadian stock offers a rare opportunity to pick up a high-quality industrial name while trading at a discount. Investors who are willing to be patient may find that this 30% dip is exactly the opening they were waiting for.
