COMPANY DESCRIPTION

Magna International is engaged in the design, development and manufacture of automotive systems, assemblies, modules and components, and engineer and assemble complete vehicles, primarily for sale to original equipment manufacturers of cars and light trucks in North America, Europe, Asia, South America and Africa. Co.'s capabilities include the design and manufacture of automotive interior systems; seating systems; closure systems; body and chassis systems; vision systems; electronic systems; exterior systems; powertrain systems; roof systems; hybrid and electric vehicles/systems, as well as vehicle engineering and contract manufacturing services.manufacturing services.

 

ECONOMIC MOAT

Magna has no economic moat.  MGA relies on superior execution for success.

 

OUTLOOK

Currency pressures, being felt throughout corporate America, will probably weigh on Magna International's near-term results.  Weakness in the Canadian dollar and the euro, in particular, will likely take a big bite out of the top and bottom lines in 2015. Strong production trends persisting throughout North America and Asia (China, most notably). In addition, content per vehicle, a key metric in the auto parts space, continues to improve, a sign that the company is wresting further market share from its smaller rivals.  Magna, equipped with excellent, should continue to return cash to its shareholders in the form of dividends and stock repurchases. 

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STRENGTHS

  • Broad product portfolio and balanced revenue streams helps to tap high value customers

  • Strong geographic foothold enables to reduce the business risk in the highly volatile industry 

WEAKNESSES

  • Overdependence on few customers could impact the profitability

  • Warranty and recall costs could influence the operating costs

     

THREATS

  • Intense competition and pricing pressure could impact results of operations

  • Foreign currency fluctuations would impact profit on goods

  • Failure to comply with environmental laws and regulations could impact financial condition 

OPPORTUNITIES

  • Positive outlook for the global new car market could provide a growth opportunity

  • Poised to benefit from the growing demand for hybrid electric vehicles

  • Strong outlook of the global automotive manufacturing industry could expand revenues and profits 

The above report is for information purposes only, and is not a solicitation or offer to buy or sell any securities. Past performance is no guarantee of future performance. Neither diversification nor asset allocation ensures a profit or guarantees against loss. Before investing, investors should consider their risk tolerance, investment objectives, time horizon, available capital, and charges and expenses.  

 

The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.

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