Financial Analysis: Stoneridge (NYSE:SRI) versus Magna International (NYSE:MGA)

Magna International (NYSE:MGA) and Stoneridge (NYSE:SRI) are both consumer discretionary companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, dividends, analyst recommendations, profitability, risk, institutional ownership and valuation.

Volatility and Risk

Magna International has a beta of 1.46, indicating that its stock price is 46% more volatile than the S&P 500. Comparatively, Stoneridge has a beta of 1.88, indicating that its stock price is 88% more volatile than the S&P 500.

Insider and Institutional Ownership

67.5% of Magna International shares are held by institutional investors. Comparatively, 98.1% of Stoneridge shares are held by institutional investors. 0.5% of Magna International shares are held by company insiders. Comparatively, 11.0% of Stoneridge shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares Magna International and Stoneridge’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Magna International	1.80%	15.04%	5.93%
Stoneridge	-15.64%	-24.91%	-8.33%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Magna International and Stoneridge, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Magna International	1	12	5	1	2.32
Stoneridge	1	2	0	0	1.67

Magna International currently has a consensus target price of $68.87, indicating a potential upside of 7.38%. Stoneridge has a consensus target price of $16.00, indicating a potential upside of 171.65%. Given Stoneridge’s higher probable upside, analysts plainly believe Stoneridge is more favorable than Magna International.

Valuation and Earnings

This table compares Magna International and Stoneridge”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Magna International	$42.67 billion	0.40	$829.00 million	$2.76	23.24
Stoneridge	$861.26 million	0.20	-$102.83 million	($4.26)	-1.38

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

Summary

Magna International beats Stoneridge on 11 of the 15 factors compared between the two stocks.

About Magna International

Magna International Inc. designs, engineers, and manufactures components, assemblies, systems, subsystems, and modules for original equipment manufacturers of vehicles and light trucks worldwide. It operates through four segments: Body Exteriors & Structures, Power & Vision, Seating Systems, and Complete Vehicles. The Body Exteriors & Structures segment provides body and chassis system, battery enclosures, and engineering and testing; and exteriors, including fascia and trims, front end modules, integration panels, liftgate modules, active aerodynamics, engineered glass, running boards, truck bed access products, breakthrough lightings, side doors, and greenhouse products. The Power & Vision segment offers electric drive systems and components, such as emotors, inverters, onboard chargers, gearboxes, and e-clutch; dedicated hybrid drives, dual and hybrid dual clutch, and manual transmissions; AWD/4WD products and rear drive modules; transmission, driveline components, and ICE; far camera module, remote camera heads, interior sensing camera, radars, thermal sensing, and domain controllers; interior and exterior mirrors, camera monitoring system driver/occupant monitoring systems, and smart actuators; forward and rear lighting, and lit grilles/panels/displays; latching system, door modules, charge port doors, power system, hinges, and door handles; and modular and textile folding roofs, and hard and soft tops. The Seating Systems segment provides seat structures, mechanism and hardware solutions, and foam and trim products. The Complete Vehicles segment offers vehicle engineering and manufacturing services. Magna International Inc. was founded in 1957 and is headquartered in Aurora, Canada.

About Stoneridge

Stoneridge, Inc., together with its subsidiaries, designs and manufactures engineered electrical and electronic systems, components, and modules for the automotive, commercial, off-highway, motorcycle, and agricultural vehicle markets in North America, South America, Europe, and internationally. The company operates through three segments: Control Devices, Electronics, and Stoneridge Brazil. The Control Devices segment offers actuators, sensors, switches, actuators, and connectors that monitor, measure, or activate specific functions within a vehicle. The Electronics segment designs and manufactures driver information systems, vision and safety systems, connectivity and compliance products, and electronic control units. Its products collect, store, and display vehicle information, such as speed, pressure, maintenance data, trip information, operator performance, temperature, distance traveled, and driver messages related to vehicle performance. This segment also offers electronic control units that regulate, coordinate, monitor, and direct the operation of the electrical system within a vehicle. The Stoneridge Brazil segment designs, manufactures, and sells vehicle tracking devices and monitoring services; vehicle security alarms and convenience accessories, including parking sensors and rearview cameras; in-vehicle audio and infotainment devices; and driver information systems and telematics solutions. The company provides its products and systems to various original equipment manufacturers and tier 1 customers, as well as aftermarket distributors. Stoneridge, Inc. was founded in 1965 and is headquartered in Novi, Michigan.