Magna International Inc. (MGA): what the price assumes

In the published model solve dated 2026-Q2, anchored at $69.03, Magna International Inc. (MGA) is priced for +8.4% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-06-27.

Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/MGA

Headline

FieldValue
TickerMGA
CompanyMagna International Inc.
Current price$69.04/sh

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin (value-band context)2.5%
Operating margin today3.1%
Margin compression (value-band)-0.6pp
Implied growth8.4%
Multiple paid15x operating income

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 9.4% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~6.1pp.

How unusual the bet is: within-range (limited comparison data)

ReferenceValue
vs own history+0.72σ
implied end-window share0%

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset2.39x4expensive
Earnings1.73x3expensive
Relative1.30x5expensive
Growth0.88x5justifies

Families that justify the price: Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.6%); the inversion above states its own rate.

Per-Model Detail (n=17)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$199.880.35xyesFCF base $2.3B, growth 4% (input: historical growth), terminal g 3.9%, WACC 7.6%, 5yr projection
DCF Exit MultipleGrowth$86.980.79xyesExit EV/EBITDA: 13.9x / 15.9x / 17.9x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative$57.061.21xyesP/E 20x (static sector reference · 2026-04), scenarios: 16.9x / 20.0x / 23.1x (bear / base = reference held flat / bull), EV/EBITDA 13x
Simple DDMGrowth$78.550.88xyesDPS $1.93, g=6.6% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3%
Two-Stage DDMGrowth$35.201.96xyesStage 1: 4% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$31.722.18xyesBV/sh $44.22, ROE (TTM) 6.6%, ke 9.3%
Two-Stage Excess ReturnAsset$26.522.60xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$50.881.36xyesRev $42.0B, growth 4% (input: historical growth; tapered), Terminal P/S: 0.4x / 0.5x / 0.5x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$35.161.96xyesEPS $2.93, growth 4% (input: historical EPS growth), PEG=6.10 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings——no—
Residual IncomeAsset$25.802.68xyesBV $44.22 + 5yr PV of (ROE (TTM) 6.6% − Kₑ 9.3%) × BV; BV grows 4.3%/yr
Graham NumberAsset$53.991.28xyes√(22.5 × EPS $2.93 × BVPS $44.22) — Graham's conservative floor
EV/EBITDA RelativeRelative$53.121.30xyesEBITDA $1.55B × sector EV/EBITDA 13.0x
FCF YieldEarnings$69.381.00xyesFCF $2285.0M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$39.821.73xyesEPS $2.93 × (8.5 + 2×3.9%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset——no—
P/Sales SectorRelative$223.060.31xyesRevenue $42.01B × sector P/S 1.5x
PEG Fair ValueRelative$16.954.07xyesEPS $2.93 × (PEG 1.5 × growth 3.9% (input: historical EPS growth)) → PE 5.8x
Earnings YieldEarnings$31.682.18xyesEPS $2.93 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$3.1b
Net debt / NOPAT (after-tax)3.51x
Net debt / operating income (pre-tax)2.37x
Interest coverage4.8x
Share count CAGR (buyback)-1.7%
Burning cashno

Bullet Takeaways

Magna is one of the largest auto-parts suppliers in the world, selling everything from body and chassis systems to seating, powertrain, and driver-assistance technology to global automakers. It is a cyclical business whose margins rise and fall with vehicle production, and production is currently soft: global light-vehicle output fell about 7% in Q1 2026.

What the static models miss is the gap between trough and normal. Trailing operating margin is barely positive, which makes the earnings-power frames read near zero, but Q1 adjusted EBIT margin expanded 190 basis points to 5.4% and adjusted EPS jumped 77% to $1.38 as self-help took hold.

At about $65 the price sits near the inversion base (about $67) and near the average analyst target. The dividend yields roughly 3.2%, and management guides full-year 2026 adjusted EPS of $6.25 to $7.25 with $1.6 billion to $1.8 billion of free cash flow.

Bull Case

The thing a generic valuation model misses about Magna is that it is being measured at the bottom of its cycle. The trailing operating margin is barely above zero, which is why the earnings-power frame computes a fair value near zero, an obviously wrong number that simply reflects depressed cyclical earnings rather than the business's normal capacity. The reality is a supplier whose self-help program is already working: in Q1 2026 adjusted EBIT rose 58%, the adjusted EBIT margin expanded 190 basis points to 5.4%, and adjusted EPS jumped 77% to $1.38, all achieved while global light-vehicle production fell about 7%. Growing margins and earnings into a production decline is the signature of a company taking cost out and improving execution, not riding a tailwind.

The forward earnings power is real and management is committed to it. Magna maintained full-year 2026 adjusted EPS guidance of $6.25 to $7.25 even after trimming its sales outlook on lower production assumptions, and it guides to $1.6 billion to $1.8 billion of free cash flow. That free-cash-flow line is what funds the capital return: the dividend yields about 3.2% and the share count is shrinking about 1.7% a year. A business that can generate well over a billion dollars of free cash flow at a trough in its end market has the earnings power the static frames cannot see at a single point in time.

The mix shift adds a growth angle to a mature business. Magna is divesting lower-margin units (lighting, rooftop systems) and refocusing on higher-content, higher-margin areas like EV powertrains and advanced driver-assistance systems, which raises the dollar value of Magna content per vehicle even when total vehicle volumes are flat. The inversion base sits near $67, essentially at the roughly $65 price, so the market is not demanding much: about 6.6% operating-profit growth, well within reach as margins normalize toward management's targets. Analysts see fair value around the same level (an average target near $68, with Scotiabank at $72 and TD at $76). The bull case is a cyclical supplier at the bottom of its cycle, with self-help margin gains, a covered 3%-plus dividend, and a mix shifting toward content that grows faster than the car market.

Bear Case

The honest entry point is the model disagreement, because for Magna the conservative frames and the optimistic frames are saying very different things and the conservative ones rest on what the company actually earns today. The earnings-power frame reads essentially zero, simple excess return lands near $32, residual income near $26, the two-stage excess return near $27, all far below the roughly $65 price (June 27, 2026), with a blended X-ray near $46. Only the relative-multiple and growth-DCF frames reach the price, and the perpetual-growth DCF near $204 only gets there by extrapolating a recovery. When the methods grounded in current profitability say the stock is worth a fraction of the price and only the recovery-dependent methods justify it, the conservative read is that you are paying a normalized multiple for a business still earning trough returns, and the recovery has to actually arrive.

The cyclicality and the balance sheet make that recovery less certain. Global light-vehicle production fell about 7% in the quarter, and Magna trimmed its production assumptions to roughly 14.9 million North American units and 16.6 million European units, so the volume backdrop is weakening, not strengthening. The leverage compounds the risk: net debt of about $3.1 billion sits at roughly 2.4 times trailing operating income, but interest coverage is only about 1.4 times, which is thin for a cyclical, and a trough that deepens would pressure both the dividend and the deleveraging. A supplier with low single-digit margins and 1.4-times coverage has little cushion if production falls further or a key program is delayed.

The structural risks sit on top. Tariffs cost about 15 basis points of margin in Q1, and while management expects the 2026 net impact to be roughly neutral, that depends on ongoing recovery negotiations with most automakers going its way. The EV transition is a double-edged sword: it raises content per vehicle on the products Magna is investing in, but it also strands investment in legacy internal-combustion components and exposes the company to the volatile, slower-than-hoped EV adoption curve. The bear conclusion is that at about $65, near the high end of where the recovery-dependent models land and far above the trough-earnings frames, the stock prices in a margin recovery that a soft, tariff-exposed, leveraged cyclical may not deliver on schedule.

Valuation

Magna is valued as a cyclical at a low point, and the models disagree exactly the way they do for a trough-earning business. The price is justified by the relative-multiple and growth-DCF frames while the asset-based and earnings-power models say expensive. The conservative frames are far below the price (earnings power value near zero, simple excess return $32, residual income $26, two-stage excess return $27), the recovery-dependent frames are far above (perpetual-growth DCF $204, P/Sales $223), and the more grounded relative and FCF frames bracket the price (relative valuation $57, FCF yield $69). The blended X-ray is near $46.

The reason the earnings-power frame reads near zero is the trough margin: the trailing operating margin is barely positive, so capitalizing it produces almost nothing. That is the legitimate case for not anchoring on it, but it is also the central risk, because the price assumes a recovery toward the mid-single-digit-and-rising margins management targets. The sensitivity is about 5.9 points of implied growth per point of cost of capital, and the reliability of the solve is rated ok.

The practical read: Magna at $65 is priced near its inversion base and near the average analyst target, which means the market is paying a roughly fair price for a normalized version of the business, not a discounted one. The upside requires the margin recovery (Q1's 190-basis-point expansion is the early evidence) to continue and the ADAS and EV-powertrain mix shift to lift content per vehicle. The downside is the trough-earnings frames near $26 to $32 if production stays weak and the recovery stalls. The 3%-plus dividend, backed by $1.6 billion to $1.8 billion of guided free cash flow, is the return collected while that plays out.

Catalysts

Q1 2026 was a self-help quarter against a weak market. Sales rose 3% to $10.38 billion on favorable currency and new program launches, even as global light-vehicle production fell about 7%. Adjusted EBIT rose 58%, the adjusted EBIT margin expanded 190 basis points to 5.4%, and adjusted EPS jumped 77% to $1.38, evidence the cost program is working.

Management maintained full-year 2026 adjusted EPS guidance of $6.25 to $7.25 while trimming the sales outlook to $41.5 billion to $43.1 billion on lower production assumptions (about 14.9 million North American units, 16.6 million European), and guided to $1.6 billion to $1.8 billion of free cash flow.

Tariffs cut about 15 basis points from Q1 margin; management expects the 2026 net impact to be similar to 2025 and roughly neutral to full-year EBIT margin, pending recovery negotiations with most automakers.

The strategic story is the mix shift: divesting lighting and rooftop units to refocus on EV powertrains and ADAS, which raises content per vehicle. Analyst sentiment is a Hold on average with a target near $68 (Scotiabank at $72, TD at $76). The dividend yields about 3.2%. The swing factors are vehicle-production trends, the pace of margin recovery, tariff-recovery outcomes, and EV-adoption timing.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive MGA report on boothcheck