Magna International Inc.’s MGA program launches are progressing as planned, and the seating pipeline continues to perform in line with expectations. One of Magna’s major customers, General Motors, has shifted its strategy from fully battery-electric trucks and SUVs to internal-combustion-engine vehicles due to market dynamics. Most of the ICE production moved from Canada and Mexico, along with some SUV production from Arlington, TX, involved competitor-held seating programs. However, Magna has retained its position as the incumbent supplier for BEV seating, meaning it did not lose that business; rather, the change reflects a shift in customer direction.
Seating remains a core, high-performing and profitable segment for the company. The recent dip in performance is primarily attributed to program-specific factors such as the end of production for certain models, including the Ford Edge, the cancellation of the EV Explorer and the relocation of the Chevy Equinox from Ontario.
Additionally, a high-volume North American program with a European OEM is winding down, with the next-generation launch beginning late this year and continuing into the next. As this transition progresses, performance is expected to return to more typical levels for the Seating segment, contributing positively overall.
In Seating, margins rose significantly in the fourth quarter, partly due to a large warranty accrual reversal from earlier in the year, resulting in unusually high margins. Even excluding this one-time benefit, margins improved year over year due to strong operational execution, cost control and sales leverage. Looking ahead to 2026, despite expectations of lower sales, Seating margins are anticipated to remain resilient. MGA stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Seating Business of Magna’s Competitors
Lear Corporation LEA acquired Kongsberg Automotive Interior Comfort Systems, IGB and Grupo Antolin's seating business to enhance the vertical integration capabilities of its Seating business. Lear’s exclusive status as a complete seat manufacturer with thermal comfort components allows for unique module solutions. The thermal comfort business is on track to achieve $1 billion in revenues by 2027. In Seating, Lear has secured awards from major OEMs, including BMW, Ford, Nissan and General Motors, along with key Chinese automakers.
Adient plc ADNT is capitalizing on the shift to electric vehicles with its Evolution of Seating Systems Sustainability initiative, offering innovative seating solutions. The company is also positioning itself for growth in Advanced Driver Assist Systems and Autonomous Driving Systems, developing seating concepts for future autonomous vehicles and collaborating with OEMs. Adient’s investments in automation and modular product platforms are driving meaningful cost and efficiency gains. Initiatives such as ModuTech modular seating and Sculpt-to-Trim are reducing labor costs, floor space needs and capital intensity. With automation and AI investments scaling, management expects sustained margin expansion and stronger free cash flow conversion over time.
MGA’s Price Performance, Valuation and Estimates
Magna has outperformed the Zacks Automotive-Original Equipment industry in the past six months. MGA shares have gained 28.6% against the industry’s decline of 6.5%.
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From a valuation perspective, MGA appears undervalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.37, lower than the industry’s 2.1.
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The Zacks Consensus Estimate for MGA’s 2026 and 2027 EPS has moved up 77 cents and 95 cents, respectively, in the past 60 days.
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This article originally published on Zacks Investment Research (zacks.com).