Magna International, Inc. (MGA) recently hit a new multi-year high on an awesome 83% Q2 earnings surprise. With rising estimates and a bullish growth projection, this Zacks #1 rank stock offers some solid upward momentum.
Company Description
Magna International Inc. is an automotive supplier that specializes in manufacturing automotive systems, modules and components. The company operates primarily in North America and Europe and has a market cap of $8.9 billion.
Although MGA has been trending higher with the market for most of the last 18 months, shares got an extra pop on Aug 6 after the company reported excellent Q2 results that included an 83% earnings surprise.
Second-Quarter Results
Revenue for the period was up 63% from last year to $6.1 billion. Earnings also came in strong at $2.77, 83% ahead of the Zacks Consensus Estimate. Although the company saw a weak Q4 last year, it now has an average earnings surprise of 106% over the last quarters.
Magma’s excellent results were driven by its North American segment, where vehicle production was up 75% from last year on heavy industry incentives.
Awesome Balance Sheet
Magma emerged from the quarter with its awesome balance sheet in tact, with cash and equivalents of $1.7 billion with a total debt load of $151 million.
Big Jump in Estimates
We saw estimates take a very big jump on the good quarter, with the current year up $2.21 to $7.56, and the next year up $1.67 to $8.00, a respectable 6% growth projection.
The valuation picture looks good here too, with a forward P/E of 10X in line with the peer average.
2-Year Chart
MGA recently hit a new multi-year high of $86.22 after jumping higher on the solid earnings surprise. The stochastic below the chart is signaling that shares are trading well away from over-bought territory. Look for support from the trend line on any weakness, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
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