Magna International (TSX:MG)(NYSE:MGA) is the largest auto parts manufacturer in North America. Shares have climbed 12% over the past three months as of late afternoon trading on October 22. The company is expected to release its third-quarter results in early November.
In October, Magna announced that it had launched output of electric drive systems last week in a newly built plant in Shanghai. This will be used for a new generation of Volkswagen EVs that will be built in Europe and China. Magna’s growing footprint in the EV market is promising, but right now the company is still wrestling with a slowdown in the broader auto sector.
Sales in the second quarter fell 1% year-over-year to $10.1 billion.
However, Magna’s outlook remained largely unchanged. A Scotiabank analyst report earlier this month slashed its forecast for Magna’s third quarter earnings by approximately 5.5%.
The ongoing General Motors strike has paralyzed the sector, and the United Auto Workers (UAW) vote is expected to go down to the wire. The current GM strike is the longest since a 67-day work stoppage in 1970.
Magna stock is currently trading at the high end of its 52-week range. Shares do boast a favourable price-to-earnings ratio of 8 and a price-to-book value of 1.4. The stock last had an RSI of 60, and it is trending toward overbought territory. I want Magna at better value in this precarious auto environment.
