Magna International Inc MGA

Magna Boasts a Strong Balance Sheet and Liquidity to Weather Downturns

Magna International is one of the largest and most diversified auto-parts suppliers in the world, but that size does not guarantee economic profit. While breadth in products and services can be advantageous regarding cross-selling—commercial activities that bolster content per vehicle and market penetration—we don’t see margins getting high enough to merit moatworthy returns on invested capital because of the multiple competitors in Magna’s largest segments, though they're close. Magna enjoys customer switching costs, which are common to auto suppliers with moats, but its financial performance, although good, does not quite merit one. Magna's revenue mix is over 75% from Detroit Three and German automakers that suffer from US-imposed tariffs, though Magna gets reimbursed for most of it.