Q: Thoughts on Magna's quarter. This company is looking like a long term hold, and after the last 5 years of holding I'm beginning to wonder if switching to RTX or WSP. I've been burnt many times by these types of capital intensive companies.
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5i Research Answer:
MG reported earnings of $1.35, declining from $1.54 a year prior and missing estimates of $1.45. Sales came in at $10.96B missing estimates of $11.01B and declining 0.22% year-over-year. Full-year and 2026 sales forecasts were also cut. Sales declined with production being stopped for certain vehicles and lower volumes of automobiles assembled. Adjusted EBIT was $577 million in the second quarter of 2024 compared to $616 million in the second quarter of 2023. Not a great quarter from MG as lower assembly volumes hurt sales and profitability creating revenue and EPS misses. Overall, we think MG is still a hold given how cheap it is and the strong forecasts for EPS growth in 2025 & 2026.