I do not own this stock of Magna International Inc. (TSX-MG, NYSE-MGA), but I used to. 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.
When I was updating my spreadsheet, I noticed Canadian Shareholders seemed to have done better than US Shareholders.
Dividend yields are low to moderate. Dividend growth for Canadians has been in the good range, but the dividends are paid in US$ and in US$ the growth has been in the moderate range, but some times close to the good range. The current dividend yield is 2.91%. The 5, 10 and historical yields are 1.86%, 2.01% and 1.82%. Dividend Growth over the past 5 and 10 years in US$ has been just under 15% (which is the start of the good range).
They can afford the dividends. The Dividend Payout Ratios are good. The Dividend Payout Ratios for EPS for 2017 in US$ is 18.6% with 5 year coverage at 18.5%. The DPR for CFPS for 2017 in US$ is 11.0% with 5 year coverage at 11.3%.
The Long Term Debt/Market Cap Ratio for 2017 is 0.16. This is good and low. The Liquidity Ratios is lower than what I like with the 2017 ratio at 1.26 and 5 year median at 1.31. This is lower than what I like as I like it to be at 1.50 or higher. The Debt Ratio is good at 1.86 with 5 year median also at 1.86. The Leverage and Debt/Equity Ratios are rather normal for this sort of company at 2.26 and 1.22 for 2017.
The Total Return per year is shown below for years of 5 to 26 to the end of 2017 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below.
It would seem that over the long term investors in this company has done just fine.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | 19.04% | 26.17% | 23.46% | 2.71% |
| 10 | 16.58% | 15.19% | 13.52% | 1.67% |
| 15 | 6.16% | 9.70% | 8.38% | 1.32% |
| 20 | 10.31% | 7.31% | 6.05% | 1.25% |
| 25 | 15.96% | 12.35% | 10.30% | 2.04% |
| 26 | 15.50% | 12.69% | 2.81% |
The Total Return per year is show below for years of 5 to 26 to date. The stock price has gone down by 13.6% this year. Doing total return to date changed the last 5 and 10 years returns quite a bit. This is to be expected when the stock price goes down year to date.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | 19.04% | 7.16% | 7.16% | 2.51% |
| 10 | 16.58% | 20.95% | 20.95% | 3.05% |
| 15 | 6.16% | 7.48% | 6.11% | 1.37% |
| 20 | 10.31% | 6.40% | 4.99% | 1.41% |
| 25 | 15.96% | 8.05% | 6.50% | 1.55% |
| 26 | 11.56% | 9.32% | 2.24% |
The Total Return per year is show below for years of 5 to 26 to the end of 2017 in US$. Generally, the difference in total return in US$ and CDN$ is because of foreign exchange.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | 14.87% | 20.26% | 17.77% | 2.48% |
| 10 | 14.36% | 12.56% | 10.92% | 1.64% |
| 15 | 8.14% | 11.61% | 9.84% | 1.77% |
| 20 | 11.29% | 8.55% | 7.05% | 1.50% |
| 25 | 16.24% | 12.31% | 10.27% | 2.04% |
| 26 | 7.82% | 6.58% | 1.25% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 7.13, 9.53 and 10.93. The corresponding 10 year ratios are 7.09, 9.58 and 11.71. The historical ratios are 8.48, 12.17 and 13.11. The current P/E Ratio is 6.64 based on a stock price of $61.54 and 2018 EPS of $9.27 CDN$ ($6.83 US$). This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $96.18 CDN$. The 10 year low, median, and high median Price/Graham Price Ratios are 0.63, 0.81 and 1.04. The current P/GP Ratio is 0.64 based on a stock price of $61.54. This stock price testing suggests that the stock price is relatively reasonable and below the median and almost cheap.
I get a 10 year median Price/Book Value per Share Ratio of 1.43 US$. The current P/B Ratio is 1.38 based on Book Value of $11,018M, Book Value per Share of $32.71 and a stock price of $45.29, all in US$. The current ratio is 3% below the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 1.82% US$. The current dividend yield is 2.91% based on a stock price of $45.29 and dividends of $1.32, all in US$. The current yield is some 60% above the historical median. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 0.40 US$. The current P/S Ratio is 0.37 based on 2018 Revenue estimate of $41,017, Revenue per Share of $121.77 and a stock price of $45.29, all in US$. The current ratio is some 8% below the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
All my tests are valid. The stock price in these tests is showing as relatively cheap or relatively reasonable and below the median. It would seem like the price of this stock is good. If you are interested in this stock, now may be the time to buy.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (6), Hold (3) and Underperform (1) recommendations. The consensus would be a Buy. The 12 month stock price consensus is $88.44 CDN$ ($65.19 US$). This implies a total return of 46.62% with 43.71% from capital gains and 2.91% from dividends. You have to wonder about the stock price consensus as it has come down only a little since the stock price has sharply declined since around June 2018.
News item by Canadian Press on Cape Breton Post talks about Magna buying a Spanish company. Jodi Pearce on Simply Wall Street talks about insider selling at Magna. A Lakeland Staff Writer on Lakeland Observer talks about some metrics for this company. Victoria Hetherington on Motley Fool thinks this stock is a good choice for a bear market because of its Sino-connection. See what analysts are saying about this stock on Stock Chase. One analyst thinks that growth will be slow because the company is so big.
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 International Inc.
The last stock I wrote about was about was Methanex Corp. (TSX-MX, NASDAQ-MEOH) ... learn more. The next stock I will write about will be Richards Packaging Income Fund (TSX-RPI.UN, OTC- RPKIF) ... learn more on December 26, 2018 around 5 pm. Tomorrow I will not be blogging.
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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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