Thx
EPS of $1.33 missed estimates of $1.47; sales were $10.45B nearly identical to estimates. Magna International's two largest business units by revenue also have the widest margins, as the smaller seating systems and complete vehicles segments need a surge in global vehicle output to expand their 3% adjusted Ebit margins. Magna has developed a product portfolio and customer base that can win wide-margin business as automakers perpetually pursue advances in safety, efficiency and connectivity. The company forecasts a 1.2% compound annual growth rate in North America new-vehicle production through 2026, a contraction in Europe and 4% gain in China. Magna's body exteriors & structures segment revenue grew 4% to $4.2 billion as adjusted Ebit margin widened 170 bps to 6.7%. The power & vision unit generated $3.8 billion in revenue -- a 25% jump -- with 230 bps worth of margin expansion to 6.1%. The stock is dropping today as investors seem to be focusing more on the 'miss' than on the improved margin outlook. We think it still has potential and it is very cheap at 8X earnings. It is expected to show overall decent earnings growth this year.