Critical Comparison: Magna International (MGA) vs. Lear Corporation (LEA)
Magna International (NYSE: MGA) and Lear Corporation (NYSE:LEA) are both large-cap auto/tires/trucks companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, institutional ownership, analyst recommendations, profitability, valuation, earnings and risk.
Valuation & Earnings
This table compares Magna International and Lear Corporation’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Magna International||$37.16 billion||0.48||$4.01 billion||$5.54||8.78|
|Lear Corporation||$19.29 billion||0.53||$1.97 billion||$15.06||10.03|
Magna International has higher revenue and earnings than Lear Corporation. Magna International is trading at a lower price-to-earnings ratio than Lear Corporation, indicating that it is currently the more affordable of the two stocks.
Magna International pays an annual dividend of $1.10 per share and has a dividend yield of 2.3%. Lear Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 1.3%. Magna International pays out 19.9% of its earnings in the form of a dividend. Lear Corporation pays out 13.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Magna International has raised its dividend for 6 consecutive years and Lear Corporation has raised its dividend for 5 consecutive years. Magna International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Insider and Institutional Ownership
59.7% of Magna International shares are held by institutional investors. Comparatively, 94.3% of Lear Corporation shares are held by institutional investors. 0.5% of Lear Corporation shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Risk and Volatility
Magna International has a beta of 1.43, indicating that its share price is 43% more volatile than the S&P 500. Comparatively, Lear Corporation has a beta of 1.31, indicating that its share price is 31% more volatile than the S&P 500.
This table compares Magna International and Lear Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of current ratings for Magna International and Lear Corporation, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Magna International currently has a consensus price target of $52.67, suggesting a potential upside of 8.32%. Lear Corporation has a consensus price target of $149.30, suggesting a potential downside of 1.13%. Given Magna International’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Magna International is more favorable than Lear Corporation.
Magna International beats Lear Corporation on 10 of the 18 factors compared between the two stocks.
Magna International Company Profile
Magna International Inc. (Magna) is a global automotive supplier. The Company’s segments are North America, Europe, Asia, Rest of World, and Corporate and Other. The Company’s product capabilities include producing body, chassis, exterior, seating, powertrain, electronic, active driver assistance, vision, closure, and roof systems and modules, as well as vehicle engineering and contract manufacturing. The Company has over 320 manufacturing operations and approximately 100 product development, engineering and sales centers in over 30 countries. It provides a range of body, chassis and engineering solutions to its original equipment manufacturer (OEM) customers. It has capabilities in powertrain design, development, testing and manufacturing. It offers bumper fascia systems, exterior trim and modular systems. It offers exterior and interior mirror systems. It offers sealing, trim, engineered glass and module systems. It offers softtops, retractable hardtops, modular tops and hardtops.
Lear Corporation Company Profile
Lear Corporation (Lear) is a supplier to the global automotive industry. The Company is engaged in supplying seating, electrical distribution systems and electronic modules, as well as related sub-systems, components and software, to automotive manufacturers. The Company’s segments include Seating and E-Systems. The Company serves the automotive and light truck market. The Seating segment consists of the design, development, engineering, just-in-time assembly and delivery of complete seat systems, as well as the design, development, engineering and manufacture of all seat components, including seat covers and surface materials, such as leather and fabric, seat structures and mechanisms, seat foam and headrests. The E-Systems segment consists of the design, development, engineering, manufacture, assembly and supply of electrical distribution systems, electronic modules and related components and software for light vehicles across the world.
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