Stock Analysis & Valuation Magna International Inc. (MG.TO)

• Previous Close: $69.61
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	71.50	3
Intrinsic value (DCF)	21.34	-69
Graham-Dodd Method	28.60	-59
Graham Formula	40.40	-42

Strategic Investment Analysis

Company Overview

Magna International Inc. (MG.TO) is a leading global automotive supplier headquartered in Aurora, Canada. Specializing in the design, engineering, and manufacturing of vehicle components, systems, and complete vehicles, Magna operates across four key segments: Body Exteriors & Structures, Power & Vision, Seating Systems, and Complete Vehicles. The company serves original equipment manufacturers (OEMs) worldwide, providing innovative solutions such as hybrid and electric drive systems, advanced driver assistance systems (ADAS), and lightweight structural components. With a strong focus on electrification and autonomous driving technologies, Magna is well-positioned in the rapidly evolving automotive industry. Founded in 1957, the company has grown into a diversified powerhouse with a market capitalization of over CAD 13.7 billion. Magna’s expertise in complete vehicle engineering and manufacturing further differentiates it from peers, making it a critical partner for automakers navigating the shift toward sustainable mobility.

Investment Summary

Magna International presents a compelling investment case due to its diversified product portfolio, strong OEM relationships, and leadership in emerging automotive technologies like electrification and ADAS. The company’s revenue of CAD 42.8 billion and net income of CAD 1.0 billion in the latest fiscal year reflect its operational resilience. However, Magna’s high beta (1.678) indicates sensitivity to broader market and auto sector volatility, which could pose risks amid economic downturns or supply chain disruptions. The company’s robust operating cash flow (CAD 3.6 billion) supports its dividend (CAD 2.70 per share) and capital expenditures (CAD 2.2 billion), but rising debt (CAD 7.1 billion) warrants monitoring. Investors should weigh Magna’s growth potential in electric and autonomous vehicle segments against cyclical industry risks.

Competitive Analysis

Magna International holds a competitive edge through its vertically integrated capabilities, spanning component manufacturing, complete vehicle assembly, and advanced R&D in electrification and ADAS. Unlike many suppliers focused on niche segments, Magna’s diversified portfolio allows it to cross-sell solutions across multiple vehicle systems, enhancing its value proposition to OEMs. The company’s Complete Vehicles segment is a key differentiator, offering contract manufacturing services that few competitors can match. However, Magna faces intense competition from other global suppliers, particularly in cost-sensitive segments like seating and body structures. Its reliance on traditional automakers also exposes it to slower EV adoption rates in certain markets. While Magna’s scale and technological investments position it well for long-term growth, pricing pressures and the capital-intensive nature of auto parts manufacturing remain challenges. The company’s ability to maintain margins while investing in next-gen technologies will be critical to sustaining its competitive position.

Major Competitors

• Aptiv PLC (APTV): Aptiv is a strong competitor in advanced vehicle technologies, particularly in ADAS and electrification. Its focus on software-defined vehicles gives it an edge in autonomous driving, but it lacks Magna’s broad manufacturing capabilities. Aptiv’s revenue growth has been robust, but its narrower product portfolio makes it more susceptible to tech disruption risks.
• Lear Corporation (LEA): Lear specializes in seating and electrical systems, competing directly with Magna’s Seating and Power & Vision segments. Lear’s strong margins in seating are a advantage, but it lacks Magna’s diversification and complete vehicle expertise. Its smaller scale in electrification could be a long-term disadvantage.
• Continental AG (VLKAF): Continental is a broader automotive supplier with strengths in tires, powertrains, and ADAS. Its larger scale in Europe is a competitive factor, but recent restructuring has impacted profitability. Unlike Magna, Continental is more exposed to commoditized segments like tires, which may limit growth margins.
• Dana Incorporated (DAN): Dana focuses on drivetrain and electrification components, competing with Magna’s Power & Vision segment. Dana’s expertise in off-highway and commercial vehicles is a niche strength, but its reliance on traditional drivetrains poses risks as EV adoption accelerates. Magna’s broader portfolio provides better diversification.
• BorgWarner Inc. (BWA): BorgWarner is a key player in propulsion systems, including electrification. Its acquisition of Delphi Technologies strengthened its EV portfolio, but it lacks Magna’s complete vehicle capabilities. BorgWarner’s aggressive EV pivot is promising, but integration risks remain a concern.