MG:CC - Down 19% From its 52-Week High Can Magna Stock Turn Things Around?
2024-04-11 10:00:00 ET
Magna International ( TSX:MG ) continues to struggle to get back up to 52-week highs. Never mind the all-time highs experienced just a few years ago. Should shares rise back to those highs, that would mean almost double today’s share price!
Yet how on earth can the company get there? Shares have come up from 52-week lows, granted. But that doesn’t mean the company is on a bull run — far from it. So, let’s see what the company has been going through lately, and if there is enough momentum to interest investors once more.
New announcements
The most recent news coming from Magna stock is a partnership with General Motors ( NYSE:GM ) and Wipro ( NYSE:WIT ). The three are joining forces to create SDVerse. This would be a new sales platform designed to provide business-to-business (B2B) automotive software .
The platform would create a digital marketplace that would connect buyers and sellers of embedded automotive software. The results would be a more streamlined approach to sourcing software, and procuring it.
The benefits should be many. These would include cost reduction, time saving, and the reduction of complexities that come from reusing existing software. And, of course, sellers using the platform could potentially see an increase in revenue opportunities from expanding their client base by using the platform.
While this all sounds promising, it still has yet to be proven. Therefore, let’s look at earnings to see if there is enough on hand today for investors to increase their interest.
Quarterly reports
We’re now waiting for first-quarter of 2024 results to come out in May. But before those come out, let’s look at how Magna stock performed in the last year — not on a year-over-year basis but rather quarter over quarter. This can give us an idea of the kind of momentum we’ve seen and whether that momentum is up or down.
During the second quarter, Magna stock reported sales of US$10.98 billion, with net income significantly improving to US$339 million after a loss the year before. By the third quarter, however, sales shrunk to US$10.69 billion, though net income rose to US$394 million. By the fourth quarter, sales were down further to US$10.45 billion, and net income shrunk down to US$271 million.
That momentum certainly doesn’t look great, and a quarterly dividend increase of US$0.475 wasn’t about to cut it. This is why shares dropped even as the company expects to see sales outgrow global light vehicle production. In fact, it believes it can expand through to 2026. It now expects between US$43.8 and US$45.4 billion in sales for 2024 and US$48.8 to US$51.2 billion by 2026.
Foolish takeaway
The bottom line here is whether Magna stock can deliver. There are many promising things that could happen in the future, but there are no certainties — that is, except for actual production. Magna stock is less exposed to risks from production in China, with more exposure in Europe.
Overall, 2024 provides a bit of a soft outlook, and it’s unclear if these new ventures will pan out. So, until there is more positive momentum among sales and net income, I would stick to the sidelines with Magna stock.
The post Down 19% From its 52-Week High, Can Magna Stock Turn Things Around? appeared first on The Motley Fool Canada .
Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Magna International. The Motley Fool has a disclosure policy .
2024