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Magna International (TSX:MG) has caught investor attention after recent share performance data showed a 1 day return of about a 1% decline, a 4% decline over the past week, and a 15% gain over the past 3 months.
See our latest analysis for Magna International.
At around CA$72.90, Magna’s recent 14.7% 3 month share price return contrasts with its slightly negative year to date share price return. The 1 year total shareholder return of about 29.5% highlights how momentum has strengthened over the longer stretch despite recent pullbacks.
If you are already watching Magna, it could be a good moment to see how other auto manufacturers are trading by scanning auto manufacturers.
With Magna trading near CA$72.90, an intrinsic value estimate implying about a 22% discount, and a 1-year return near 30%, the key question is simple: is there still upside here, or is the market already pricing in future growth?
With Magna International last closing at about CA$72.90 versus a narrative fair value near CA$70.64, the current setup centers on modest overvaluation and what needs to go right for earnings and margins.
Magna International is focusing on operational excellence and restructuring actions, which are expected to result in meaningful margin expansion over the next two years. This is likely to positively impact net margins and earnings.
Want to see what sits behind that margin story? The most followed narrative leans heavily on how profits, cash generation and future earnings multiples interact. The full set of assumptions is where the real tension shows up.
Result: Fair Value of CA$70.64 (OVERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, lower vehicle production in key regions, along with pressure from EV volumes or foreign exchange headwinds, could quickly challenge the margin improvement story investors are watching.
Find out about the key risks to this Magna International narrative.
So far, the narrative fair value suggests Magna is modestly overvalued at around CA$72.90 versus CA$70.64. Yet our DCF model points the other way, with Magna trading about 22% below an intrinsic value of roughly CA$93.77. When two methods disagree this much, it raises the question of which one to place more weight on.
Look into how the SWS DCF model arrives at its fair value.
If you see the story differently, or just want to test your own assumptions against the numbers, you can build a personalized view in minutes with Do it your way.
A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Magna International.
If Magna is already on your radar, do not stop there. Use the Simply Wall St Screener to quickly surface fresh ideas that fit the way you invest.
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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