Will Magna's Upcoming Divestments Impact Its 2026 Outlook?

Magna International Inc. MGA has signed definitive agreements to sell off its Lighting business through two separate deals, along with its Rooftop Systems unit in a third transaction.

Under the terms, one global investment firm will acquire the Lighting operations that support front and rear lighting programs across North America, South America and China. Another investment firm will take over Magna’s European Lighting operations as well as its Rooftop Systems business.

Both the Lighting and Rooftop Systems units fall under Magna’s Power & Vision segment and generated about $1 billion and $100 million in global revenues, respectively, in 2025.

All three deals are anticipated to be completed in the second half of 2026, pending standard closing conditions and regulatory approvals.

Per Magna, these divestments are not expected to affect its previously issued 2026 adjusted earnings per diluted share outlook.

Magna projects its 2026 revenues to fall between $41.9 billion and $43.5 billion compared with $42B recorded in 2025. The company anticipates an adjusted EBIT margin of 6-6.6%, up from 5.6% last year. Adjusted diluted EPS is expected to be in the range of $6.25 to $7.25. MGA stock currently sports a Zacks Rank #1 (Strong Buy). 

You can see the complete list of today’s Zacks #1 Rank stocks here.

MGA’s Price Performance, Valuation and Estimates

Magna has outperformed the Zacks Automotive-Original Equipment industry and its peers, Autoliv, Inc. ALV and Gentex Corporation GNTX, in the past six months. MGA shares have gained 31.5% against the industry’s decline of 5.8%. Autoliv and Gentex shares have lost 5.9% and 14.2%, respectively, during the same period.

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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 0.38, lower than the industry’s 2.1. Autoliv is trading at 0.75, while Gentex is trading at 1.78.

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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).

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