October 17, 2024
Top 10 Stock Magna Hold Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Magna – Top 10 Stock in Toronto Stock Exchange Index TSX Composite
Magna is listed as a top 10 stock on October 17, 2024 in the market index TSX Composite because of its high performance in at least one of the Obermatt investment strategies. Only the Obermatt Value Rank exhibits above-average performance, which means that the stock is seen as critical by the professional community and other financial facts are below average, conveying mixed investment signals. Based on the Obermatt 360° View of 27 (27% performer), Obermatt assesses an overall hold recommendation for Magna on October 17, 2024.
Snapshot: Obermatt Ranks
| Country | Canada |
| Industry | Auto Parts & Equipment |
| Index | Human Rights, TSX Composite |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Magna Hold
| 360 METRICS | October 17, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 93 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 3 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 48 |
|
||||||
| SENTIMENT | ||||||||
| SENTIMENT | 23 |
|
||||||
| 360° VIEW | ||||||||
| 360° VIEW | 27 |
|
||||||
ANALYSIS: With an Obermatt 360° View of 27 (better than 27% compared with alternatives), overall professional sentiment and financial characteristics for the stock Magna are below the industry average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for Magna. Only the consolidated Value Rank has an attractive rank of 93, which means that the share price of Magna is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is lower than for 93% of alternative stocks in the same industry. All other consolidated ranks are below average. The consolidated Growth Rank has a low rank of 3, which means that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. The consolidated Safety Rank has a riskier rank of 48, meaning the company has a riskier financing structure than 52% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. Finally, professionals are more pessimistic about the stock than for 77% of alternative investment opportunities, reflected in the consolidated Sentiment Rank of 23. ...read more
RECOMMENDATION: With a consolidated 360° View of 27, Magna is worse than 73% of all alternative stock investment opportunities based on the Obermatt Method. Only one of the consolidated Obermatt Ranks exhibits above-average performance, namely the Value Rank at a level of 93. All other ranks are below average, so proceed with caution. The company has below-average growth expectations (Growth Rank of 3), a riskier financing structure than the competition (Safety Rank of 48), and the market sentiment in the professional investor community ranking at (Sentiment Rank of 23) is negative. This combination is sensitive to a crisis, because high debt levels (low safety) require growth to finance the debt burden. It’s no wonder that the investor community indicators are skeptical (low sentiment). Good value is sometimes an indication that the company's future is challenging. The below-par growth performance may be the reason for this assessment. We recommend evaluating whether the future of Magna is as challenging as the low price of the stock suggests. Since the professional community is pessimistic, you might need to worry about the future of Magna. Only invest if you have solid reasons to believe that the low growth is temporary and the current market sentiment is an overreaction, possibly due to reputational issues in the past. ...read more
Sentiment Strategy: Professional Market Sentiment for Magna negative
ANALYSIS: With an Obermatt Sentiment Rank of 23 (better than 23% compared with alternatives), overall professional sentiment and engagement for the stock Magna is critical, mostly below average. The Sentiment Rank is based on consolidating four sentiment indicators, with half the indicators below and half above average for Magna. Analyst Opinions are at a rank of 34 (worse than 66% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. Worse, Analyst Opinions Change has a rank of 18, which means that stock research experts are getting even more pessimistic. In addition, the Professional Investors rank is 25, which means that professional investors hold less stock in this company than in 75% of alternative investment opportunities. Pros tend to invest in other companies. The only positive sentiment indicator for Magna is Market Pulse, with a rank of 58, which means that the current professional news and professional social networks tend to be positive when discussing this company (more positive news than for 58% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 23 (less encouraging than 77% compared with investment alternatives), Magna has a reputation among professional investors that is far below that of its competitors. This is an ambiguous picture: analysts are negative and getting even more critical while the news in the market is positive. Who should investors believe? This is a difficult question in such a situation. Investors should proceed cautiously and verify not only the financial performance in the Obermatt Value, Growth and Safety Ranks but also independent news coverage of the company. ...read more
Value Strategy: Magna Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 93 (better than 93% compared with alternatives) for 2024, Magna shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for Magna. Price-to-Sales is 81 which means that the stock price compared with what market professionals expect for future sales is lower than for 81% of comparable companies, indicating a good value for Magna's revenue size. The same is valid for expected Price-to-Profits, more favorable than for 88% of alternatives, and this is also true for the Price-to-Book capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 70. Compared with other companies in the same industry, dividend yields of Magna are expected to be higher than for 99% of all competitors (a Dividend Yield rank of 99). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 93, is a buy recommendation based on Magna's stock price compared with the company's operational size and dividend yields. Since all value metrics are above the industry average, there is no objection to investing in Magna based on its detailed value metrics.
Growth Strategy: Magna Growth Momentum negative
ANALYSIS: With an Obermatt Growth Rank of 3 (better than 3% compared with alternatives), Magna shows one of the most restricted growth dynamics in its industry. There is little momentum in this company. The Growth Rank is based on consolidating four value indicators, with all four metrics below average for Magna. Sales Growth has a rank of 16, which means that currently professionals expect the company to grow less than 84% of its competitors. The same is valid for Profit Growth, with a rank of 33, and Capital Growth with 12. In addition, Stock Returns have a below market rank of 29, which means that the stock returns have recently been below 71% of alternative investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 3, is a sell recommendation for growth and momentum investors. These are all bad growth momentum indicators. These are negative signals for investors interested in growth companies. Value is likely good for this company, as investors may have left this stock in the cold. If that is the case, investors should look at the company's outlook, especially Sentiment performance, because it may be a turnaround situation that could entail above-average stock returns in the future. But it remains a risky bet, as no growth signals are in the green zone yet. ...read more
Safety Strategy: Magna Debt Financing Safety below-average
| SAFETY METRICS | October 17, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 60 |
|
||||||
| REFINANCING | ||||||||
| REFINANCING | 32 |
|
||||||
| LIQUIDITY | ||||||||
| LIQUIDITY | 56 |
|
||||||
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 48 |
|
||||||
ANALYSIS: With an Obermatt Safety Rank of 48 (better than 48% compared with alternatives), the company Magna has financing practices on the riskier side, which means that their overall debt burden is above the industry average. This doesn't mean that the business of Magna is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for Magna. Leverage is at a rank of 60, meaning the company has a below-average debt-to-equity ratio. It has less debt than 60% of its competitors. Liquidity is also good at a rank of 56, meaning the company generates more profit to service its debt than 56% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 32, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 68% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 48 (worse than 52% compared with alternatives), Magna has a financing structure that is riskier than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Magna. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more
Combined financial peformance: Magna Below-Average Financial Performance
| COMBINED PERFORMANCE | October 17, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 93 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 3 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 56 |
|
||||||
| COMBINED | ||||||||
| COMBINED | 35 |
|
||||||
ANALYSIS: With an Obermatt Combined Rank of 35 (worse than 65% compared with investment alternatives), Magna (Auto Parts & Equipment, Canada) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Magna are a good value (attractively priced) with a consolidated Value Rank of 93 (better than 93% of alternatives) but show below-average growth (Growth Rank of 3), and are riskily financed (Safety Rank of 48), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 35, is a hold recommendation based on Magna's financial characteristics. As the company Magna's key financial metrics exhibit good value (Obermatt Value Rank of 93) but low growth (Obermatt Growth Rank of 3) and risky financing practices (Obermatt Safety Rank of 48), it may be a risky investment, because debt in times of crises can make things worse. The good value, better than 93% of comparable companies, may indicate the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity. ...read more
Obermatt Portfolio Performance
We’re so convinced about our research, that we buy our stock tips.
See the performance of the Obermatt portfolio.