Magna International Inc. Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next
Magna International Inc. (TSE:MG) investors will be delighted, with the company turning in some strong numbers with its latest results. It was overall a positive result, with revenues beating expectations by 2.2% to hit US$11b. Magna International reported statutory earnings per share (EPS) US$1.72, which was a notable 19% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following last week's earnings report, Magna International's 17 analysts are forecasting 2026 revenues to be US$42.1b, approximately in line with the last 12 months. Statutory earnings per share are predicted to bounce 118% to US$6.26. In the lead-up to this report, the analysts had been modelling revenues of US$42.4b and earnings per share (EPS) of US$6.05 in 2026. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.
View our latest analysis for Magna International
The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 8.5% to CA$98.88. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Magna International analyst has a price target of CA$112 per share, while the most pessimistic values it at CA$77.09. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Magna International shareholders.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Magna International's past performance and to peers in the same industry. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 2.8% by the end of 2026. This indicates a significant reduction from annual growth of 3.4% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 6.4% annually for the foreseeable future. It's pretty clear that Magna International's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Magna International's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Magna International going out to 2028, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 2 warning signs for Magna International that you need to be mindful of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.