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If you have been wondering whether Magna International’s current share price lines up with its underlying worth, you are not alone. This article is here to unpack that question clearly.
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Magna’s share price recently closed at US$77.53, with returns of 6.0% over 7 days, 13.5% over 30 days, 3.3% year to date, 42.0% over 1 year, 2.5% over 3 years, and a 2.3% decline over 5 years. Together, these figures provide a mixed picture of how the market has treated the stock over different time frames.
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Recent coverage of Magna has focused on its position in the global auto parts space and how market sentiment around the sector has shifted with changing expectations for vehicle demand and supply chain normalisation. Together, these themes have provided context for the stock’s recent moves as investors reassess how much they are willing to pay for established auto suppliers.
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On our simple valuation checklist, Magna scores 3 out of 6, which means it screens as undervalued on half of the metrics we look at. Next, we will walk through those traditional valuation approaches before finishing with a more complete way to think about what the stock might be worth.
Find out why Magna International’s 42.0% return over the last year is lagging behind its peers.
A Discounted Cash Flow, or DCF, model estimates what a company could be worth by projecting its future cash flows and then discounting those back to today using a required rate of return. It is essentially asking what those future dollars are worth to you right now.
For Magna International, the latest twelve month Free Cash Flow is about $1.47b. Analysts have provided explicit Free Cash Flow estimates out to 2028, with $1,354.11m in 2026, $1,551.70m in 2027, and $1,226.10m in 2028. Simply Wall St then extrapolates further, with modelled Free Cash Flow of $1,267.36m in 2035, all in $ and all discounted back using a 2 Stage Free Cash Flow to Equity framework.
On this basis, the model arrives at an estimated intrinsic value of $96.25 per share, compared with the recent share price of US$77.53. That gap translates to an implied 19.4% discount, which reflects Magna trading below this particular estimate of fair value.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Magna International is undervalued by 19.4%. Track this in your watchlist or portfolio, or discover 872 more undervalued stocks based on cash flows.
For a profitable company like Magna, the P/E ratio is a straightforward way to judge what you are paying for each dollar of earnings. Investors usually accept a higher P/E when they expect stronger earnings growth or see lower risk, and a lower P/E when they are more cautious about growth or feel the earnings stream is riskier.
Magna currently trades on a P/E of 15.26x. That sits below the Auto Components industry average P/E of 21.01x, and also below the broader peer group average of 27.04x, which suggests the market is putting a lower earnings multiple on Magna than on many of its peers.
Simply Wall St also uses a “Fair Ratio” for P/E, which is the multiple it would expect for Magna given its earnings growth profile, industry, profit margins, market cap and specific risks. This Fair Ratio can be more tailored than a simple peer or industry comparison, because it adjusts for differences in quality and risk rather than assuming all companies deserve the same P/E. On this framework, Magna’s current P/E of 15.26x is below the Fair Ratio, indicating the shares screen as undervalued on this metric.
Result: UNDERVALUED
P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1444 companies where insiders are betting big on explosive growth.
Earlier we mentioned that there is an even better way to understand valuation, and on Simply Wall St that takes the form of Narratives. These let you write a clear story for Magna International by linking your view on its business, such as whether its electric expansion, China growth and buybacks will support earnings closer to US$1.9b or nearer to US$1.5b by around 2028, to a set of revenue, earnings and margin forecasts. That can then be linked to a fair value that is constantly refreshed as new news or results arrive, so you can compare that fair value with the current price and decide whether the stock looks attractive or expensive, all within a Community page that millions of investors use to share different fair values, from lower estimates near CA$54.51 to higher ones around CA$80.21.
Do you think there’s more to the story for Magna International? Head over to our Community to see what others are saying!
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.
Companies discussed in this article include MG.TO.
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