MGA Fundamental Research Investment Analysis, Magna International, Inc. Class A Sub.Vtg

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Magna International, Incorporated Class A Sub.Vtg (MGA)

The Razor's Edge

2-Year Price History

Recent Price
(1/7/2009)
$32.70
52-Week Price
$22.80 - $81.96
Market Capitalization
$3.7 Billion
Dividend Yield
2.20%
Most Recent Dividend
$1.15

About Magna International, Inc. Class A Sub.Vtg

Magna International, Incorporated Class A Sub.Vtg is considered to operate in the Consumer Goods sector. They specifically operate in the Automotive Parts business segment contained within the Automotive industry.

The Company is an automotive supplier. It designs, develops and manufactures technologically advanced automotive systems, assemblies, modules and components, and engineer and assemble complete vehicles for sale to manufacturers of cars and light truck.

Ockham's Rating

Rating Specific Information Withheld Premium Access Only

MGA Revenue

For a long time, value investors have used the current share price relative to sales per share levels as an important valuation tool. We utilize a historical weighted average methodology that treats recent years more importantly in the calculation. When looking at MGA through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 10 years are 0.44x and 0.31x respectively.

Utilizing this range we can see that MGA’s current Price to Sales per share ratio of 0.14x is significantly below its average levels historically. In fact, with a current price of $31.76, MGA is a full 65% below its average Price to Sales ratio at comparable sales levels. This is a rare occurrence and, when taken in context of the other areas of our analysis, can be a strong positive for our outlook for MGA.

MGA Cash Earnings

Looking at MGA specifically in their Cash Earnings capabilities, Ockham views MGA as significantly below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for MGA, the current level of Cash Earnings compared to its historical levels helps identify where MGA is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 7.09 and a historical low Cash Earnings per share ratio of 5.08, an investor can relate where value becomes optimal.

So what does "significantly below" mean when we talk about Price to Cash Earnings numbers for MGA? From the Ockham perspective, we are looking specifically at MGA to see if the market is recognizing the huge disparity between MGA's past stock price to Cash Earnings ratio to today's levels. At a difference of 67% below the average historical Price to Cash Earnings ratio, our view would be quite positive at this point. However, as with all metrics, we need to also take other factors into account when looking at MGA. While we view better Cash Earnings metrics as very important, if the market is slow to identify this value, or if Cash Earnings were to fall from these levels, we would become more neutral in our stance.

MGA Dividends

While it is not necessary to pay an attractive dividend or a dividend at all, to receive a positive rating from Ockham, we view dividends as an additionally helpful measure in determining the future potential of any company.

In MGA’s case, the estimated annual dividend is $0.72 resulting in a current dividend yield of 2.27%. Similar to our review of Sales and Cash Earnings per share, we evaluate dividend yields from MGA against the historic high and low levels over the past 10 years. The highest dividend yield from MGA over this period was 3.37% while the lowest dividend yield was 0.88% Therefore, the current dividend yield of MGA is above the historical median by 6.82%. This is definitely a positive in our view.

Peer Comparison

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Magna International, Inc. Class A Sub.Vtg Industry Grouping

(1/7/2009)
Company Ticker Market Cap (Ml) Latest
Price
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
5-Yr.
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not incuding MGA) 2.68 3.33 » 17.41 0.30 0.93 » 5.50 8.91% 15.98%
*10 year range does not include current year values
Harley-Davidson, Inc. HOG $4.0 Billion $17.35 4.28 9.33 » 31.84 0.77 3.07 » 17.23 6.96% 32.30%
Magna International, Inc. Class A Sub.Vtg MGA $3.7 Billion $32.70 2.06 3.16 » 7.98 0.14 0.28 » 2.21 15.98% 9.74%
Borg Warner Inc. BWA $2.7 Billion $23.65 3.90 1.85 » 11.12 0.40 0.30 » 4.51 14.30% 13.28%
General Motors Corp. GM $2.5 Billion $4.13 0.23 0.87 » 7.61 0.01 0.38 » 1.16 -0.61% 5.18%
Navistar International Corp. NAV $2.2 Billion $30.71 1.67 2.13 » 18.88 0.12 0.21 » 1.49 15.00% 9.32%
Tata Motors Limited ADR TTM $1.9 Billion $4.95 3.31 2.45 » 17.63 0.21 0.69 » 3.09 n/a 19.82%
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Key Fundamentals

MGA - Magna International, Incorporated Class A Sub.Vtg Fundamentals
Price (1/7/2009) $32.70
Volume (1/7/2009) 1.6 Million
10 Day Average Volume 855,300
13 Week Price Range $22.80 - $43.63
52 Week Price Range $22.80 - $81.96
LTM Revenue $25.7 Billion
 
Shares Outstanding (12/2007) 111.9 Million
Market Capitalization $3.7 Billion
Shares Held By Institutions 75.2 Million
Insitutional Holders 280
% Shares Held By Institutions 67.20%
Earnings Per Share (EPS) $5.86
P/E Ratio 16.50
Book Value Per Share $73.26
 
Gross Margin 9.80%
Quarterly Dividend 0.72
Dividend Yield 2.20%
Beta 1.71
Fiscal Year Ends December