Is Magna (TSX:MG) an undervalued stock to buy as its Q2 sales climb 4%?

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Is Magna (TSX:MG) an undervalued stock to buy as its Q2 sales climb 4%?

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 Is Magna (TSX:MG) an undervalued stock to buy as its Q2 sales climb 4%?
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Highlights

  • Magna announced a quarterly dividend of US$ 0.45 to be paid on August 26
  • The TSX Capped Consumer Discretionary Index spiked by over seven per cent month-to-date
  • The MG stock gained by nearly 16 per cent during this time

Investors seeking long-term value could consider TSX undervalued stocks like Magna International (TSX: MG) for quality returns and steady dividend income. While releasing its financial results for Q2 2022 on Friday, July 29, the Canadian vehicles and parts company announced a quarterly dividend of US$ 0.45 to be paid on August 26.

The TSX Capped Consumer Discretionary Index spiked by over seven per cent month-to-date (MTD), while MG stock gained nearly 16 per cent during this time despite widespread economic uncertainties.

On that note, let us closely look at Magna International’s financial performance in the latest quarter and its stock performance.

Magna’s Q2 FY2022 financial results

Magna International said its sales jumped to US$ 9.36 billion in the second quarter of 2022, up by four per cent from US$ 9.03 in Q2 2021. The automotive supplier said that the latest quarter’s sales growth came as the global light vehicle production grew by two per cent, primarily helped by a double-digit increase of 14 per cent in North America.

Is Magna (TSX: MG) an undervalue stock to buy as its Q2 sales climb 4%?©Kalkine Media®; ©Garis Studio via Canva.com

The C$ 23 billion-market cap company saw its losses from operations before income taxes reach US$ 88 million in Q2 2022 compared to an income of US$ 540 million a year ago. As a result, Magna posted a net loss of US$ 156 million in the latest quarter compared to a profit of US$ 424 million in Q2 2021.

Magna’s stock performance

The MG stock plunged by over 20 per cent year-over-year (YoY). However, this automotive stock climbed roughly 10 per cent in the past month. MG stock clocked a 52-week low of C$ 68.39 on July 5 this year.

According to Refinitiv data, Magna stock appears to be on a mixed trend since March this year and held a Relative Strength Index (RSI) value of 63.61 on Thursday, July 28, denoting a medium to high momentum.

Bottom line

Magna International kept its 2022 outlook for light vehicle production unchanged in all geographies (14.7 million units in North America, 16.4 million units in Europe and 24.4 million units in China). However, the large-cap company updated its sales expectations to US$ 37.6 billion to US$ 39.2 billion for 2022 (earlier US$ 37.3 billion to US$ 38.9 billion).

In May, Magna inked a multi-year collaboration agreement with software company BlackBerry (TSX: BB) for integrated Advanced Driver Assistance Systems (ADAS) solutions as it expects the global ADAS market to expand significantly in the future.

Please note, the above content constitutes a very preliminary observation based on the industry, and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks. 

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