Magna International

The business

Tier-one global automotive supplier across body/chassis/exteriors, power & vision, seating, and complete-vehicle contract assembly.

Content-per-vehicle model tied to global light-vehicle production, with rising exposure to EV, ADAS and electronics.

Reports in USD; dual-listed on TSX (MG) and NYSE (MGA).

The moat

Scale, engineering depth and deep OEM relationships across virtually every major automaker.

Broad product breadth and complete-vehicle assembly capability few suppliers can replicate.

Long design-in cycles create switching costs once Magna wins a platform.

Financial snapshot

Most recent reported period : Fiscal 2025 (year ended Dec 31, 2025); Q2 2026 most recent quarter. Figures reflect the review date — confirm current numbers before acting.

Free cash flow yield & sustainable growth

Free cash flow yield : ≈12% (est.)FY2025 operating cash flow US$3.60B − capex US$1.29B ≈ US$2.31B free cash flow ÷ ~US$18.9B market cap ≈ 12% on a simple basis; Magna's own free-cash-flow definition (after equity and other investments) is materially lower — roughly US$1B, or about a 5% yield — so treat 12% as the optimistic bound.

Revenue is essentially flat as global light-vehicle production stagnates and OEMs trim/delay EV programs.

Growth depends on winning content-per-vehicle in electrification and ADAS plus cost restructuring, not end-market volume.

Free cash flow is real but volatile year to year given high capex and working-capital swings.

See the full free-cash-flow yield ranking →

Valuation & what to watch

Simple (OCF − capex) FCF yield looks high at ~12%, but this is boosted by a favorable working-capital year and understates Magna's true capital intensity.

Magna's own reported free cash flow (after equity and other investments) is materially lower — roughly US$1B, closer to a ~5% yield — a more conservative read.

P/E ~25x on depressed cyclical earnings; the stock is a classic 'cheap on cash, uncertain on earnings' cyclical.

Dividend

~US$1.94/share annually, ~2.9% yield, supported by a long dividend-growth record; covered by free cash flow but exposed to the auto cycle.

Risks & the bear case

• Deep cyclicality tied to global auto production volumes.
• Tariff and trade uncertainty across the US/Canada/Mexico auto supply chain.
• OEM EV program delays and volume cuts that strand supplier investment.
• High capital intensity and FX translation (USD reporting, TSX listing) add volatility.

Recent developments

FY2025 revenue slipped ~2% to US$42.0B with net income down ~18% amid soft global production.

Q2 2026 revenue rose ~3% YoY to about US$11.0B, a modest stabilization signal.

Verdict

Magna is a high-quality but deeply cyclical auto supplier that screens cheap on cash flow (~12% on a simple OCF-minus-capex basis, though its own after-investment free-cash-flow definition is far lower near ~5%). The bull case rests on content growth in EV/ADAS and cost discipline; the bear case is a flat vehicle market and tariff risk capping earnings. Treat the headline FCF yield with caution given cyclical working-capital swings. CoinCompass is a publisher, not an investment adviser — do your own due diligence.