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What's in the Offing for Magna (MGA) This Earnings Season?

Magna International MGA is scheduled to report first-quarter 2021 results on May 6, before the bell. The Zacks Consensus Estimate for the quarter’s earnings and revenues is pegged at $1.57 per share and $9.47 billion, respectively. This automotive component supplier registered higher-than-anticipated earnings in the last reported quarter on greater-than-expected contribution across all four segments of the company. Over the trailing four quarters, Magna surpassed the Zacks Consensus Estimate on all occasions, with the average being 29.8%.

Trend in Estimate Revisions

The Zacks Consensus Estimate for Magna’s first-quarter earnings per share has witnessed a downward revision of 2 cents in the past seven days to $1.57, which, however, indicates an improvement from the year-ago figure of 86 cents per share. Moreover, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year rise of 9.3%.

Key Predictions

Demand for vehicles in first-quarter 2021 had been strong amid preference for personal mobility, widespread vaccination drive, optimism around federal aid and the gradual reopening of activities. This is anticipated to have boosted the automotive components supplier’s revenues during the quarter to be reported.

The Zacks Consensus Estimate for first-quarter revenues and adjusted EBIT from the Body Exteriors & Structures segment is pegged at $4,063 million and $358 million, implying year-over-year growth of 10.5% and 79.9%, respectively. The consensus estimate for quarterly revenues and pretax profit from the Complete Vehicles segment stands at $1,696 million and $73 million, indicating an increase of 28.4% and 46%, respectively, on a year-over-year basis. Further, the Zacks Consensus Estimate for quarterly revenues and adjusted EBIT from the Seating Systems unit is pegged at $1,406 million and $76 million, indicating an increase of 11.5% and 90%, respectively, from a year ago. The consensus mark for revenues and adjusted EBIT from the Power & Vision unit is pegged at $2,859 million and $205 million, pointing to a year-over-year rise of 13.3% and 51.8%, respectively.

While improved performance from each of the segments is likely to have buoyed Magna’s earnings in the to-be-reported quarter, high capital spending to evolve its business profile for incorporating technologically advanced new products may have dented the results to a certain extent. The consensus mark for Corporate and other spending is pegged at $150 million, implying a rise from $124 million in the prior-year quarter.

Earnings Whispers

Our proven Zacks model does not conclusively predict an earnings beat for Magna this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that is not the case here as elaborated below.

Earnings ESP: The company has an Earnings ESP of -4.13%. This is because the Most Accurate Estimate is pegged 7 cents below the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Magna — which shares space with Allison Transmission Holdings ALSN, Autoliv, Inc. ALV and BorgWarner Inc. BWA — currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

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