DCF Studio

    MG.TO · TOR · Consumer Cyclical

    Magna International Inc.

    Also onConsensus Drift

    Implied value per share

    CAD 70.64

    Market price

    CAD 88.58

    Implied upside

    -20.3%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · USD model at 1.3982

    AdjustedReports in USD, trades in CAD. Modelled in USD, converted at the end.
    NoteRisk-free rate is an assumption: CAD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    CAD 70.64-20.3%
    Exit multiple
    CAD 107.42+21.3%
    Market price
    CAD 88.58

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 43.5bnUSD 45.0bnUSD 46.6bnUSD 48.3bnUSD 50.0bn+3.5%
    EBITUSD 2.1bnUSD 2.1bnUSD 2.2bnUSD 2.3bnUSD 2.4bn+3.5%
    NOPATUSD 1.5bnUSD 1.6bnUSD 1.6bnUSD 1.7bnUSD 1.7bn+3.5%
    Add depreciation & amortisationUSD 1.8bnUSD 1.9bnUSD 2.0bnUSD 2.0bnUSD 2.1bn+3.5%
    Less capital expenditureUSD -2.0bnUSD -2.1bnUSD -2.2bnUSD -2.2bnUSD -2.3bn+3.5%
    Less increase in working capitalUSD 66.4mUSD 68.8mUSD 71.2mUSD 73.7mUSD 76.4m-3.5%
    Free cashflow to firmUSD 1.4bnUSD 1.4bnUSD 1.5bnUSD 1.5bnUSD 1.6bn+3.5%
    Discount factor0.95390.86790.78970.71860.6538-
    Present valueUSD 1.3bnUSD 1.3bnUSD 1.2bnUSD 1.1bnUSD 1.0bn-5.8%
    Present Value Of The ForecastUSD 5.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate3.30%CAD assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta1.558Reported 1.833, pulled toward 1.0 (Blume)
    Cost of equity11.87%Risk-free + beta x equity risk premium
    Cost of debt4.00%Interest expense / average total debt
    Market capitalisationUSD 23.7bn78.0% of capital
    Total debtUSD 6.7bn22.0% of capital, book value as a proxy
    Tax rate26.5%Effective, capped at statutory
    WACC9.90%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 50.52

    69% of EV

    Forecast FCFF, final year
    USD 1.6bn
    Capex at depreciation, working capital in reinvestment
    USD 2.0bn
    Less reinvestment at g/ROIC (25.2% of NOPAT)
    USD -501.2m
    Capitalised
    USD 1.5bn
    ROIC (WACC floor)
    9.9%
    Terminal value, undiscounted
    USD 20.5bn
    Terminal value, discounted
    USD 13.4bn
    Enterprise value
    USD 19.3bn
    Less net debt
    USD 5.1bn
    Equity value
    USD 14.3bn

    Exit at 7.1x EBITDA

    Value per shareUSD 76.82

    78% of EV

    Terminal value, undiscounted
    USD 31.9bn
    Terminal value, discounted
    USD 20.9bn
    Enterprise value
    USD 26.8bn
    Less net debt
    USD 5.1bn
    Equity value
    USD 21.7bn

    Spread between methods: 41%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.90%69.5570.5771.7273.0674.63
    8.90%58.0158.2858.5458.8159.08
    9.90%50.0650.2950.5250.7550.98
    10.90%43.5843.7943.9944.1944.39
    11.90%38.2238.3938.5738.7538.93

    Outlined: this model. Green text: above today's price of 63.35. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year3.5%7.3%+3.8pp
    EBIT margin4.7%5.7%+0.9pp
    Discount rate9.9%8.5%-1.4pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.