Head-To-Head Review: Magna International (MGA) vs. Standard Motor Products (SMP)

Magna International (NYSE: MGA) and Standard Motor Products (NYSE:SMP) are both auto/tires/trucks companies, but which is the superior stock? We will compare the two businesses based on the strength of their earnings, risk, valuation, profitability, dividends, analyst recommendations and institutional ownership.

Institutional and Insider Ownership

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60.7% of Magna International shares are owned by institutional investors. Comparatively, 80.5% of Standard Motor Products shares are owned by institutional investors. 6.6% of Standard Motor Products shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Magna International and Standard Motor Products’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Magna International $38.95 billion 0.55 $2.21 billion $5.96 10.08
Standard Motor Products $1.12 billion 0.98 $37.97 million $2.83 17.11

Magna International has higher revenue and earnings than Standard Motor Products. Magna International is trading at a lower price-to-earnings ratio than Standard Motor Products, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Magna International and Standard Motor Products, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Magna International 2 4 9 1 2.56
Standard Motor Products 0 2 1 0 2.33

Magna International presently has a consensus price target of $63.69, suggesting a potential upside of 6.05%. Standard Motor Products has a consensus price target of $54.00, suggesting a potential upside of 11.50%. Given Standard Motor Products’ higher probable upside, analysts clearly believe Standard Motor Products is more favorable than Magna International.

Dividends

Magna International pays an annual dividend of $1.32 per share and has a dividend yield of 2.2%. Standard Motor Products pays an annual dividend of $0.84 per share and has a dividend yield of 1.7%. Magna International pays out 22.1% of its earnings in the form of a dividend. Standard Motor Products pays out 29.7% 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 Standard Motor Products has raised its dividend for 7 consecutive years. Magna International is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Magna International and Standard Motor Products’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Magna International 5.66% 19.61% 9.02%
Standard Motor Products 3.40% 14.15% 7.95%

Risk and Volatility

Magna International has a beta of 1.34, indicating that its share price is 34% more volatile than the S&P 500. Comparatively, Standard Motor Products has a beta of 1.68, indicating that its share price is 68% more volatile than the S&P 500.

Summary

Magna International beats Standard Motor Products on 11 of the 18 factors compared between the two stocks.

About Magna International

Magna International Inc. designs, develops, and manufactures automotive systems, assemblies, modules, and components in North America, Europe, Asia, and South America. The company offers body systems, including exterior sheetmetal and closure systems, body structure systems, and energy management solutions; chassis systems, such as frames and chassis subframes, suspension links and arms, and chassis modules; and engineering services comprising support, program management, virtual tool, prototype build and validation, testing, and research and development services. It also provides fascia and exterior trims, liftgate and exterior modules, front end modules, ACTERO active aerodynamics, and lightweight composites; and roof systems that include softtops, retractable hardtops, modular tops, and hardtops. In addition, the company offers latching system, hinge and wire forming, power closure, electronic, door module, window system, engineered glass, sealing, trim and roof rack, testing center, and running board closures; and driveline systems, fluid pressure and controls, and metal-forming solutions. Further, it provides driver assistance systems and electronic components; and interior and exterior mirrors, actuators, electronic vision systems, door handle and overhead console technologies, and front and signal lightings. Additionally, the company offers seating systems, mechanism and seat structure solutions, foam and trim solutions, and design and development solutions; and engineering services, vehicle contract manufacturing services, and fuel systems. The company serves original equipment manufacturer, tier 1, medium and heavy truck, and non-automotive customers. Magna International Inc. was founded in 1957 and is headquartered in Aurora, Canada.

About Standard Motor Products

Standard Motor Products, Inc. manufactures and distributes replacement parts for motor vehicles in the automotive aftermarket industry. Its Engine Management segment manufactures and distributes engine management replacement parts, including electronic ignition control modules, fuel injectors, remanufactured diesel injectors and pumps, ignition wires, coils, switches, relays, EGR valves, distributor caps and rotors, various sensors primarily measuring temperature, vehicle systems, electronic throttle bodies, and other engine management components primarily under the Standard, Blue Streak, BWD, Select, Intermotor, OEM, LockSmart, TechSmart, Tech Expert, and GP Sorensen brands. The company's Temperature Control segment manufacture, remanufacture, and distribute replacement parts for automotive temperature control systems, engine cooling systems, power window accessories, and windshield washer systems, primarily under the Four Seasons, EVERCO, ACi, and Hayden brands. This segment provides new and remanufactured compressors, clutch assemblies, blower and radiator fan motors, filter dryers, evaporators, accumulators, hose assemblies, thermal expansion devices, heater valves, heater cores, AC service tools and chemicals, fan assemblies, fan clutches, oil coolers, window lift motors, window regulators and assemblies, and windshield washer pumps. The company sells its products primarily to large retail chains, warehouse distributors, original equipment manufacturers, and original equipment service part operations in the United States, Canada, Latin America, and Europe. Standard Motor Products, Inc. was founded in 1919 and is headquartered in Long Island City, New York.

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