Magna's (MGA) Seating Unit To Expand With VIZA Acquisition

Magna International Inc. (NYSE:MGA) is developing future-oriented vehicle seating solutions to cater to changing customer needs. Apart from developing solutions on its own, the company also signed an agreement to acquire VIZA Geca SL, a Spanish company that offers seat-structure expertise. Subject to regulatory approvals, the deal is expected to close by the end of first-quarter 2019.

With an experience of 73 years, VIZA’s product portfolio consists of patented floor-latch systems and foldable seats, which are manufactured at its four production hubs. In 2017, the company generated sales of €125 million. It has various automakers as its customers. The existing customers include Volkswagen (DE:VOWG_p) AG, Renault (PA:RENA) Nissan and PSA Group.

After closing the acquisition, VIZA’s production hubs at Spain, Czech Republic, Morocco and Mexico, along with its 1,100 workforces, will be added to Magna’s existing hubs. The addition will help the company’s seating business to gain a competitive edge and bolster its growth with the help of VIZA’s workforce expertise and hubs’ presence. Magna’s seating business has 50 manufacturing operations, and six research and development centers across the globe.

Magna International Inc. Price and Consensus

Magna International Inc. Price and Consensus | Magna International Inc. Quote

With a shift toward mobility and autonomous vehicles, Magna believes that the requirement of seating solutions will also change. In order to gain from this change in requirement, Magna has been actively focusing to develop its seating business that requires an increased level of investment. In the last week, the company revealed its vision for an advanced seating platform. The platform focuses on offering the ideal user experience. The flexible vehicle interior will help passengers to carry cargo and interact with each other during a long ride.

In third-quarter 2018, Magna’s seating systems unit generated $1.2 billion in sales on the back of product launches. In the near term, this segment’s frequent launch of superior-quality products beside program management will likely drive sales. For 2018, the segment is projected to generate $5.4-$5.6 billion in sales.

Over the past 30 days, the Zacks Consensus Estimate for Magna’s earnings in 2018 has moved 0.3% upward. Over the past three months, the company’s stock has lost 19.6%, outperforming 30.1% decrease recorded by the industry it belongs to.

Zacks Rank & Stocks to Consider

Magna currently has a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space are Fox Factory Holding Corporation (NASDAQ:FOXF) , Tesla, Inc. (NASDAQ:TSLA) , and Cooper Tire & Rubber Company (NYSE:CTB) . Fox Factory and Tesla currently sport a Zacks Rank #1 (Strong Buy) while Cooper Tire carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Fox Factory has an expected long-term growth rate of 5%. Shares of the company have increased 27.4% over the past six months.

Tesla has an expected long-term growth rate of 35%. Shares of the company have rallied 11.4% over the past three months.

Cooper Tire has an expected long-term growth rate of 12%. Over the past three months, shares of the company have gained 2.8%.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>