Q: At what point does magna become too cheap to ignore?
Down almost 30 percent from its high. .
Down almost 30 percent from its high. .
5i Research Answer:
Growth has slowed down and profitability has been sliding since 2018. Its valuation of 7X forward earnings reflects a lot of these concerns, and it trades just above book value at 1.1X price to book. Cash flows are mostly used to pay its dividend, and it has been a net issuer of debt over the past two years. We do not like its recent momentum, following a string of weak earnings results. We would prefer to wait until next earnings to assess if a floor can be put into its price, but for now the cheap valuation could become even cheaper if results continue to disappoint.