Shareholders might have noticed that Magna International Inc. (TSE:MG) filed its full-year result this time last week. The early response was not positive, with shares down 5.0% to CA$74.84 in the past week. It was not a great result overall. While revenues of US$43b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 19% to hit US$4.23 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We’ve gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
View our latest analysis for Magna International
Taking into account the latest results, the consensus forecast from Magna International’s 19 analysts is for revenues of US$44.8b in 2024. This reflects an okay 4.7% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 41% to US$5.98. Before this earnings report, the analysts had been forecasting revenues of US$45.1b and earnings per share (EPS) of US$6.74 in 2024. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.
It might be a surprise to learn that the consensus price target was broadly unchanged at CA$90.13, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There’s another way to think about price targets though, and that’s to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Magna International analyst has a price target of CA$105 per share, while the most pessimistic values it at CA$77.97. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Magna International shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Magna International’s growth to accelerate, with the forecast 4.7% annualised growth to the end of 2024 ranking favourably alongside historical growth of 0.7% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 10.0% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, Magna International is expected to grow slower than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Magna International. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it’s tracking in line with expectations. Although our data does suggest that Magna International’s revenue is expected to perform worse than the wider industry. The consensus price target held steady at CA$90.13, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn’t be too quick to come to a conclusion on Magna International. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for Magna International going out to 2026, and you can see them free on our platform here..
It might also be worth considering whether Magna International’s debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.