In terms of valuation, Goldman noted that Magna's shares are trading at 4.8 times the enterprise value to EBITDA (EV/EBITDA) based on Scotiabank (TSX:BNS)'s 2025 estimates, which is below the three-year average of 5.2 times. On a free cash flow basis, the shares are trading at a yield of 12.6% on the 2025 estimates provided by Scotiabank. InvestingPro analysis shows the company has maintained dividend payments for 33 consecutive years, with a current dividend yield of 4.62%. For deeper insights into Magna's valuation and financial health metrics, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers. InvestingPro analysis shows the company has maintained dividend payments for 33 consecutive years, with a current dividend yield of 4.62%. For deeper insights into Magna's valuation and financial health metrics, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In terms of valuation, Goldman noted that Magna's shares are trading at 4.8 times the enterprise value to EBITDA (EV/EBITDA) based on Scotiabank's 2025 estimates, which is below the three-year average of 5.2 times. On a free cash flow basis, the shares are trading at a yield of 12.6% on the 2025 estimates provided by Scotiabank. InvestingPro analysis shows the company has maintained dividend payments for 33 consecutive years, with a current dividend yield of 4.62%. For deeper insights into Magna's valuation and financial health metrics, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
The analyst's estimates assume that the Light Vehicle Production (LVP) in North America and Europe will remain flat. Magna has been recognized for its consistent ability to surpass expectations by reducing costs and capital expenditures more aggressively than previously forecasted. For instance, the company decreased its megatrend engineering spending by $90 million across the first two quarters of the year and cut capital expenditures by $250 million during the same period. These measures are estimated to have enhanced the company's free cash flow (FCF) by $320 million year-to-date.
Magna has also been active in repurchasing its shares, having bought back approximately 5.1 million shares, or 1.7% of outstanding shares, since the third-quarter report. Notably, the company initiated its Normal Course Issuer Bid (NCIB) ahead of schedule and plans to reach the maximum allowed repurchase limit.
In terms of valuation, Goldman noted that Magna's shares are trading at 4.8 times the enterprise value to EBITDA (EV/EBITDA) based on Scotiabank's 2025 estimates, which is below the three-year average of 5.2 times. On a free cash flow basis, the shares are trading at a yield of 12.6% on the 2025 estimates provided by Scotiabank.
In other recent news, Magna International Inc (TSX:MG). experienced a decrease in its Q3 2024 consolidated sales, dropping 4% to $10.3 billion, primarily due to lower vehicle production and a divestiture in India. Adjusted earnings before interest and taxes (EBIT) stood at $594 million, with adjusted earnings per share (EPS) decreasing by 12% to $1.28. BMO Capital Markets increased the price target for Magna's shares to $55.00, maintaining an Outperform rating, while Goldman Sachs downgraded Magna's rating to sell and reduced the price target to $41.
BMO Capital Markets projects an increase in earnings and cash flow for Magna, driven by a decrease in capital expenditures and research and development spending. This is alongside the benefits of cost-cutting measures, the launch of more favorable contracts, and share repurchase initiatives. On the other hand, Goldman Sachs revised Magna's earnings per share (EPS) estimates for the years 2025 and 2026, reflecting a cautious outlook on the company's financial performance.
Magna also plans to restart share repurchases, targeting up to 10% of its public float, alongside ongoing dividends. These are some of the latest developments surrounding Magna International Inc.
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