Magna International Inc.

On my other blog I am today writing about the trouble with RRSPs...continue...

I do not own this stock of Magna International Inc. (TSX-MG, NYSE-MGA). Magna is a stock I have tracked for some time. I have always liked Frank Stronach, the entrepreneur who used to run this company. Manufacturing firms are fairly risky and it is not the sort of company I usually buy. I held this company between September 2002 and September 2006 and earned 5% return per year including dividends. When I bought this stock in 2002, I felt I was paying a good price for it. There were some rumors that it might be bought out in 2006, so I sold.

Dividends have had a varied life on this stock where there have been both decreases and increases and some years where nothing occurred for the dividend. Even with all this, dividends are up by 14% and 0% per year over the past 5 and 10 years in CDN$ terms.

The dividends are paid in US$, so in US$ the dividends are up by 14% and 5% per year over the past 5 and 10 years. Because dividends are paid in US$ they can vary for Canadian investors depending on the exchange rate.

The stock price is up some 67% this year. So, the 5 and 10 year total return to date is very good over the past 5 years. The 5 and 10 year total return is 37.39% and 6.11% per year with 35.44% and 4.88% per year from capital gains and 1.95% and 1.24% per year from dividends.

This stock had sort of flat lined between 2001 and 2006. The stock price dropped significantly in 2008 and only recovered in 2012. The stock is now at a higher price that it has ever been.

The outstanding shares have increased by 0% and 2% per year over the past 5 and 10 years. Shares have increased due to stock options, DRIP, Share Issues and collapse of dual classes of shares. They have decreased due to buy backs.

The growth in this company is better in US$ than in CDN$. Revenue per Share is up by 3.3% and 7% per year over the past 5 and 10 years in US$ terms, but is up by 3.5% and 2% per year in CDN$ terms. Earnings per Share is up by around 16% per year in both US$ and CDN$ terms over the past 5 years. The EPS is up by 7.7% in US$ and by 2.8% in CDN$ terms over the past 10 years.

Cash Flow per Share is up by just over 4% per year over the past 5 and 10 years in US$ and CDN$ terms. It is flat over the past 10 years in US$ terms and down by 4.6% per year over the past 10 years in CDN$ terms.

The Return on Equity has improved since 2010 and the ROE for 2012 was 15.2% and is expected to be around 14.2% in 2013. The ROE on comprehensive income is close at 16% for 2012 and is higher than the one for net income by 5.4%.

The Liquidity Ratio has generally hovered around 1.50. For 2012 it is just 1.37 and the current one is a bit lower at 1.35. The Debt Ratio has always been good and is currently at 2.13. The current Leverage and Debt/Equity Ratios are good at 1.88 and 0.88.

Frank Stronach was bought out in 2010 and since then there has been increases in revenue, earnings and cash flow. See my spreadsheet at mg.htm.

This is the first of two parts. Second part will be posted on Tuesday, December 17, 2013 and will be available here.

Magna International is the most diversified global automotive supplier. They design, develop and manufacture technologically advanced automotive systems, assemblies, modules and components, and engineer and assemble complete vehicles, primarily for sale to original equipment manufacturers ("OEMs") of cars and light trucks. Their capabilities include the design, engineering, testing and manufacture of automotive interior systems; seating systems; closure systems; body and chassis systems; vision systems; electronic systems; exterior systems; powertrain systems; roof systems; hybrid and electric vehicles/systems; as well as complete vehicle engineering and assembly. Its web site is here Magna.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.