Magna InternationalMGA

Morningstar Rating

Stock Research and Analysis

by David Whiston, CPA, CFE

Magna is one of the most diversified auto-parts firms in the world. This fact, along with its very strong balance sheet, will allow the firm to remain healthy despite any further weakening in auto sales.

Since automakers are making more vehicles on Read more

Bulls Say

Magna's vehicle-assembly division could benefit as automakers outsource production of these models to avoid the time and cost of building a new auto factory.

Magna should win more business as smaller and weaker suppliers exit the industry amid a period of ongoing consolidation.

Japanese transplants are likely to increase the content of domestic parts in their North American vehicles because of the weak U.S. dollar and from adding more production in the U.S.

As automakers seek to use one supplier for more of any one car's production, large suppliers such as Magna are in the best position to gain share because they can offer a wide range of parts. Read more

Bears Say

High raw-material prices could return, which would mean margin contraction.

Detroit automakers represent a large part of Magna's sales, and these companies are likely to continue losing market share.

The firm's dual-class structure means investors can only ride the coattails of the Stronach family.

A high degree of operating leverage means small changes in revenue can have a large impact on profits. Read more

Strategy

Magna seeks to remain a heavily diversified auto-parts maker. Divisions are run in a decentralized manner, giving division heads control over strategic decisions. Magna is also seeking to improve its Read more

Management

Magna is led by co-CEOs Siegfried Wolf and Donald Walker. Both are Magna veterans who succeeded members of the Stronach family. Frank Stronach, 77, founded the company in his garage in 1957, and his daughter Belinda left the CEO position in 2004 to Read more

Profile

Founded in a Toronto garage in 1957, Magna has grown to become one of the most diversified auto-parts makers in the world. In 2008, the company had nearly $24 billion in Read more

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