Yahoo Finance Will Magna International Inc’s (TSE:MG) Earnings Grow Over The Next Year?
After Magna International Inc’s (TSE:MG) earnings announcement in March 2018, analysts seem cautiously bearish, with profits predicted to rise by 8.40% next year compared with the higher past 5-year average growth rate of 11.02%. Presently, with latest-twelve-month earnings at US$2.29b, we should see this growing to US$2.48b by 2019. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Check out our latest analysis for Magna International
How is Magna International going to perform in the near future?
Longer term expectations from the 16 analysts covering MG’s stock is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
From the current net income level of US$2.21b and the final forecast of US$2.83b by 2021, the annual rate of growth for MG’s earnings is 6.66%. This leads to an EPS of $9.78 in the final year of projections relative to the current EPS of $5.93. The primary reason for earnings growth is due to cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. With a current profit margin of 5.66%, this movement will result in a margin of 6.62% by 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Magna International, I’ve compiled three key aspects you should further examine:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is Magna International worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Magna International is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Magna International? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
