Stock Evaluation
Company Description: MAGNA 9 Jan 2025
Company description: “Magna International Inc. is a Canada-based mobility technology company. The Company is a global automotive supplier that has complete vehicle engineering and contract manufacturing expertise, as well as product capabilities which include body, chassis, exterior, seating, powertrain, active driver assistance, electronics, mechatronics, mirrors, lighting and roof systems. It also has electronic and software capabilities across many of these areas. Its segments include Body Exteriors & Structures; Power & Vision; Seating Systems, and Complete Vehicles. Its products include Battery Enclosures, Body-in-White Solutions, Chassis Systems, ADAS and automated driving, control modules, active aerodynamics, exterior systems and modules, lighting, mechatronics, mirrors, electrified powertrain products, Complete Vehicle Engineering and others. Its global network includes approximately 343 manufacturing operations and 105 product development, engineering and sales centers spanning 28 countries."

Business Valuation Algorithm Criteria in 10 Steps 

Step 1: Marketplace
Is the marketplace expanding? - Yes due to autonomous cars, AI
Is the company’s share of the marketplace expanding?​-Yes
​Does this marketplace have good profit margins x good revenue?
Yes at 2.72% x $43.0B revenue (Big Green Flag)

Step 2: Leadership
Does the company display strong leadership, entrepreneurial character and competitiveness?​
Swamy Kotagiri, age 55, was appointed as the CEO of Magna
effective January 1, 2021. He has been instrumental in the company’s recent growth
and evolution through his operational leadership, and has aligned the organization’s strategy around the megatrends shaping future mobility. (Green Flag)

Step 3 Earnings
Have earnings been rising during the last 3 years? 
Are earnings projected to continue to go up this year and next year?
Yes. (Green Flag)

Step 4 Cumulative Earnings
What is the cumulative value of 5 years of earnings shown compared to the stock price? 
62.8% (Big Green Flag)

Step 5 Price to Earnings Ratio
What is the price over earnings? 
7.0 (Big Green Flag for value)
What is the 5 year growth percentage? 
5.5% (Low Green Flag )
What is the 5 yr growth % compared to the P/E? 
5.5% growth vs 7.0 P/E (Low Green Flag)
What is the 5 yr growth % compared to next years growth %? 
5.5% vs 12% next year growth (Big Green Flag)

Step 6 Dividends
Is the dividend generous (ie: above 4%)?
4.59% (Big Green Flag)
Is the dividend easily covered by earnings?
E = 3x Div (Big Green Flag)
Is the stock a dividend aristocrat (ie: dividend growth on a yearly basis over 25 years).
Yes (Green Flag)

Step 7 Global Reach
Does the company sell globally?
Yes, 28 countries. (Green Flag)

Step 8 Directors
Do the directors own more than 10% of the company?
Management owns <1% (Neutral Flag)
Are directors adding to their share ownership? 
Yes last August 2023  (Green Flag)
Is the company buying back its shares?
No. (Neutral Flag)

Step 9 Using AI as a tool to confirm a stock information
To Gemini: is Magna a good stock to buy now?

Whether Magna International (MG.TO) stock is a good buy depends on a number of factors,
including the current price, the company's financial health, and the market outlook. 

Price
As of January 2025, Magna stock was trading at a 51% discount from its five-year high. 
The average 12-month price target for Magna stock was $49.65,
which is a 23.10% increase from the current price. 
However, the long-term moving average indicates a general sell signal. 

Financial health 
Magna's recent financial results were not very encouraging,
with net income and adjusted equity per share (EPS) declining.
However, the company has a decent amount of cash on hand
and liquidity to absorb weak sales cycles.

Market outlook 
Magna is actively investing in electrification and autonomous driving technologies.
The company's efforts to improve operational efficiencies are showing promising results.

Final Thoughts
Magna is the strongest manufacturing company in the automotive parts business. It sits very close to its (using) book price of $59.60 and present (though declining) projected earnings yield 14.3%.  Based on analysts estimated earnings projections found on LSEG, the price is projected to triple from $59.58 to $183.24 over the next 5 years. This is considered a value buy as its present price is below a discounted 5 year growth rate of 20% to meet that $183.24 target price. 

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Algorithm