On Sep 18, 2013, Zacks Investment Research upgraded
Magna International Inc.
) to Outperform from Neutral, based on record-high revenues and
earnings per share in the second quarter of 2013, coupled with
improving operating cash flows and increased earnings
Why the Upgrade?
Earnings per share of Magna International reached a record
high of $1.78 in the second quarter of 2013, driven by higher net
income and lower share count. Even revenues reached a record high
of $8.96 billion due to higher global sales. Moreover, the
current revenue guidance of $33.3-$34.7 billion, if achieved,
will imply record high annual revenue for the company in
The rising earnings of Magna International are boosting its
cash flow. This in turn is facilitating capital deployment.
As a result of the strong earnings and guidance, 8 out of 10
analysts covering Magna International raised their earnings per
share (EPS) guidance for 2013 in the last 60 days. This resulted
in a 3.7% increase in the Zacks Consensus Estimate to $6.16 per
share, up 6.44% year over year.
Further, 9 out of 10 analysts covering this stock with a Zacks
Rank of 1 (Strong Buy) raised their 2014 EPS guidance in the last
60 days, resulting in a 4.8% rise in the Zacks Consensus Estimate
to $7.41. This translates into a year-over-year growth of 20.25%
for Magna International.
Stricter regulatory requirements and increasing customer
preferences for light passenger vehicles are expected to boost
sales in future. At the same time, rising raw material costs and
increasing competition from low-cost countries could adversely
Other Stocks to Consider
Other companies worth considering in the original auto and
truck business are
American Axle & Manufacturing Holdings Inc.
Fuel Systems Solutions, Inc.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
AMER AXLE & MFG (AXL): Free Stock Analysis
FUEL SYSTEM SOL (FSYS): Free Stock Analysis
GENTEX CORP (GNTX): Free Stock Analysis
MAGNA INTL CL A (MGA): Free Stock Analysis
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