Novice Investing - Magnifying Magna's Earning Report

Date: Tuesday 13th 2008f May 2008 07:20:21 AM

Magnifiying Magna's Earning Report - 08/16/2005

By: Novice Investing Staff

On August 10th, Magna International (MGA) announced quarterly earning of $ 2.06 per share, handily beating expectation. (click here for the news ) We expect Magna to post yearly profit of $ 6.10 per share. For the first six months of 2005, Magna already earn $ 3.73 per share. Shares fell due to disappointing guidance. We at novice investing here were scratching our head. What is wrong with the guidance? For all of 2005, Magna now expects to have a sales of between $ 21.6 - $ 22.6 Billion. We already expect back in April of 2005. In fact, we expect sales to be at around $ 19.07 Billion. For our sales and EPS prediction, you can click here.

Want to know something else? Even at $ 19.07 Billion and earning per share of $ 6.10, the fair value of Magna common stock is at $ 105 per share! Click here for the article. What else is new? Uhm, Magna now expects average dollar content per vehicle to be $ 710- $ 730 in North America and $ 305 - $ 325 in Europe. Nope. Nothing new here. We already expect Magna to sell $ 700 worth of average dollar content vehicle in North America and $ 315 for Europe.

How about vehicle production volumes? Yep. We already covered that too back in April. For 2005, Magna now expects unit vehicle production to be 15.7 million unit in North America and 16.1 million unit in Europe. Our expectation is for Magna to produce 11.5 million units in North America and 15 million units in Europe.

In short, I don't think there is anything new with Magna's development. If Magna can achieve targets higher than our prediction, then it most likely will earn north of $ 6.10 per share for 2005. We can then expect Magna share price to reach $ 105. Meanwhile, let the share price drops due to another 'disappointment'. Let them sell. Do now worry about the short-term. We have other things to worry about, like... life ! As long as Magna can earn $ 6.10 per share annually, Magna share price will eventually reach fair value, which is presently at $ 105 per share. Now, let's go back to sleep or do other things in life.

END

For more discussions about our stock portfolio pick, please click here.

Or....for preliminary research, you can browse our collection of annual reports here

Disclaimer: The sole purpose of this article is educational. This article is merely the opinion of the writer and is not in any way a buy/sell recommendation regarding Magna International Inc.(MGA) or other securities.

[Resources] [Forum] [Link Partner ] [Novice Investing Directory ] [ Submit Your Article Here ]