Current industry fundamentals are not favourable with slowing US car sales and weaker global growth
However, Magna’s shares are discounting this weak environment with its shares trading at 1.4 times book value and a little over 8 times 2019 EPS.
Time to purchase a cyclical company like Magna is when its shares are out of favour.
Its shares offer a free cash flow yield of over 12%. Its dividend yield is 2.99% while its cash dividend payout ratio is a low 21.7%.
It has a strong balance sheet with debt only 31% of total equity.
Over the last twelve months it has generated free cash flow of $2.7 billion or $8.005 per share.