Magna International Inc. MGA generated $3.6 billion in operating cash flow and $1.9 billion in free cash flow in 2025. This performance reflects a disciplined approach to capital spending, with capital expenditures improving to 3.1% of sales, alongside continued enhancements in fixed cost structure and engineering optimization. As a result, the company ended the year with an agency-adjusted debt-to-EBITDA ratio of 1.58x, which surpassed its expectation of being below 1.7x.
Looking ahead, the company expects 2026 to be another year of strong free cash flow, projected in the range of $1.6 billion to $1.8 billion or more than 90% of adjusted net income. Magna expects this level of free cash flow to be sustainable and is targeting a 100% conversion of net income into free cash flow. It expects this consistency to support its capital allocation strategy not only in 2026 but also in the years ahead.
For 2026, after accounting for dividends, it anticipates having substantial cash available for share repurchases while continuing to reduce leverage and maintain financial flexibility to support business operations. The company expects its leverage ratio to fall below 1.5x in 2026. MGA stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
