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Linamar Corp. (TSE:LNR)
TSX:LNR
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Linamar
(TSX:LNR)77Outperform
Positive Factors
Capital Allocation
Management is signaling a more consistent capital allocation framework going forward, which is seen as a positive move.
Mobility Margin
Mobility margin was better than feared, and the drivers are largely within the company's control.
Negative Factors
Industrial Outlook
The share price upside may be dampened until there is more clarity on the Industrial segment where 2025 guidance was lowered.
Linamar (LNR) vs. S&P 500 (SPY)
Market Cap
$3.16B
Dividend Yield1.99%
Average Volume (3M)196.15K
Price to Earnings (P/E)12.7
Beta (1Y)1.36
Revenue Growth14.14%
EPS Growth21.46%
CountryCA
Employees32,000
SectorConsumer Cyclical
Sector Strength53
IndustryVehicles
Share Statistics
EPS (TTM)4.18
Shares Outstanding60,693,237
10 Day Avg. Volume232,057
30 Day Avg. Volume196,150
Financial Highlights & Ratios
PEG Ratio0.23
Price to Book (P/B)N/A
Price to Sales (P/S)0.31
Price to Cash Flow (P/CF)2.20
P/FCF Ratio2.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$63.25Price Target Upside21.51% Upside
Rating ConsensusHold
Number of Analyst Covering4
Linamar Business Overview & Revenue Model
Company DescriptionLinamar Corporation is a diversified global manufacturing company headquartered in Guelph, Ontario, Canada. The company operates in two primary sectors: the Powertrain/Driveline segment and the Industrial segment. It is known for designing, developing, and manufacturing precision metallic components, modules, and systems for the global vehicle and mobile industrial markets. Linamar's core products include engine, transmission, and driveline components for automotive and industrial applications, as well as aerial work platforms, telehandlers, and agricultural equipment.
How the Company Makes MoneyLinamar Corporation generates revenue through the manufacturing and sale of its precision components and systems, primarily to automotive and industrial equipment manufacturers. The Powertrain/Driveline segment contributes significantly to its earnings by supplying parts like engine blocks, transmission systems, and driveline components to major automotive OEMs worldwide. The Industrial segment also plays a crucial role in its revenue generation through the production of machinery such as aerial work platforms and agricultural equipment, sold to a wide range of industrial customers. Linamar's strategic partnerships with leading automotive companies and its focus on innovation and efficiency in manufacturing processes further bolster its financial performance.
Linamar Financial Statement Overview
Summary
Linamar demonstrates strong revenue growth and profitability, supported by a solid balance sheet and effective cash flow management. However, attention is needed on increasing liabilities and capital expenditure fluctuations.Income Statement
Linamar has demonstrated strong revenue growth, with a notable increase from previous periods. The gross profit and net profit margins are solid, indicating efficient cost management and profitability. The EBIT and EBITDA margins are healthy, showcasing operational efficiency. However, maintaining the growth trajectory will be vital in an industry susceptible to cyclical demand.85
Very Positive
Balance Sheet
The balance sheet is strong, with a reasonable debt-to-equity ratio indicating balanced leverage. The return on equity is commendable, reflecting effective use of shareholders' resources. The equity ratio is robust, representing financial stability. However, attention should be paid to increasing liabilities, which could impact future leverage.78
Positive
Cash Flow
Linamar exhibits strong cash flow management with operating cash flow comfortably covering net income. The free cash flow growth is impressive, supporting reinvestment and debt management. Yet, fluctuations in capital expenditures could pose risks to consistent free cash flow generation.82
Very Positive
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 10.66B | 9.73B | 7.92B | 6.54B | 5.82B | 7.42B | Gross Profit |
| 1.52B | 1.32B | 974.81M | 937.65M | 788.42M | 1.07B | EBIT |
| 922.07M | 794.02M | 594.83M | 601.23M | 424.19M | 624.50M | EBITDA |
| 1.49B | 1.26B | 1.04B | 1.07B | 923.79M | 1.10B | Net Income Common Stockholders |
| 594.93M | 503.05M | 426.19M | 420.56M | 279.13M | 430.44M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 471.98M | 653.33M | 860.51M | 928.43M | 861.10M | 338.23M | Total Assets |
| 8.13B | 9.85B | 8.58B | 7.39B | 7.56B | 7.58B | Total Debt |
| 2.49B | 1.77B | 1.31B | 791.54M | 1.30B | 1.90B | Net Debt |
| 2.02B | 1.12B | 447.86M | -136.88M | 442.11M | 1.56B | Total Liabilities |
| 4.33B | 4.53B | 3.76B | 2.79B | 3.20B | 3.55B | Stockholders Equity |
| 3.80B | 5.32B | 4.81B | 4.60B | 4.35B | 4.03B |
| Cash Flow | Free Cash Flow | ||||
| 268.31M | 3.26M | 44.88M | 654.22M | 1.14B | 608.71M | Operating Cash Flow |
| 958.69M | 793.55M | 468.13M | 908.76M | 1.43B | 1.17B | Investing Cash Flow |
| -1.39B | -1.19B | -715.74M | -267.32M | -290.31M | -547.20M | Financing Cash Flow |
| 528.87M | 207.40M | 156.39M | -572.08M | -616.41M | -724.08M |
Linamar Technical Analysis
Negative
52.05
Price Trends
54.96
Negative
57.64
Negative
61.22
Negative
Market Momentum
-1.03
Negative
45.36
Neutral
73.95
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:LNR, the sentiment is Negative. The current price of 52.05 is below the 20-day moving average (MA) of 52.44, below the 50-day MA of 54.96, and below the 200-day MA of 61.22, indicating a bearish trend. The MACD of -1.03 indicates Negative momentum. The RSI at 45.36 is Neutral, neither overbought nor oversold. The STOCH value of 73.95 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:LNR.
Linamar Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $3.16B | 12.68 | 4.98% | 1.99% | 14.14% | 21.46% | |
73 Outperform | $237.55M | 8.50 | 7.46% | 7.12% | -1.93% | 3.61% | |
72 Outperform | $11.35B | ― | -5.31% | ― | 1.44% | -183.14% | |
71 Outperform | $15.55B | 11.34 | 8.62% | 5.04% | 2.72% | 5.00% | |
60 Neutral | C$566.01M | 5.92 | 6.57% | 2.70% | -3.36% | -46.97% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% | |
59 Neutral | C$1.34B | ― | -3.46% | ― | 20.56% | 94.32% |
* Consumer Cyclical Sector Average
Performance Comparison
TSE:LNR
Linamar
52.05
-16.90
-24.51%
TSE:CAE
CAE
35.49
9.09
34.43%
TSE:MRE
Martinrea International
7.65
-3.71
-32.65%
TSE:MG
Magna International
55.20
-14.52
-20.82%
TSE:XTC
Exco Technologies
6.17
-0.88
-12.53%
TSE:NFI
NFI Group Inc
10.53
-1.15
-9.85%
Linamar Earnings Call Summary
Earnings Call Date: Mar 5, 2025 | % Change Since: 2.58% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Neutral
Linamar demonstrated resilience by achieving strong financial results and securing new business despite challenging market conditions and tariff uncertainties. However, the company faces significant pressures from declining sales in key segments and market challenges in Europe.Highlights
Strong Financial Performance
Linamar achieved nearly $800 million in free cash flow for the year and reported double-digit earnings growth despite market challenges. The company also maintained a healthy balance sheet with a net debt to EBITDA ratio of 0.79.
New Business Wins
Linamar secured nearly $3.5 billion in new business for its Mobility segment, with significant takeover work growing from $150 million to $180 million, indicating strong market positioning.
Market Share Growth
Despite industry declines, Linamar increased its market share in key segments, such as a 12% increase in global content per vehicle and outperforming a 17% market decline in agriculture by maintaining growth.
Lowlights
Decline in Mobility and Industrial Sales
Mobility sales decreased by 5.8% due to significant market declines in Europe and North America. Industrial sales faced challenges due to lower demand for access equipment, despite growth in other areas.
European Market Challenges
The company faced a significant impairment due to market deterioration in Europe, resulting in a goodwill write-down, and is focusing on cost-cutting measures to mitigate these challenges.
Tariff Uncertainty
The imposition of tariffs on Canada and Mexico by the U.S. has created uncertainty, with potential impacts on supply chains and production, although Linamar has taken steps to mitigate these risks.
Company Guidance
In the Linamar Fourth Quarter 2024 Earnings Conference Call, several key metrics were highlighted. The company achieved nearly $800 million in free cash flow for the year, while also delivering another year of double-digit earnings growth, marking the tenth time in the last 15 years. The net debt to EBITDA ratio was a healthy 0.79, showcasing a strong balance sheet. Linamar's sales for the quarter reached $2.4 billion, slightly down from the previous year, with the Mobility segment experiencing a 6% decline. However, the Industrial segment saw a 5% increase, largely due to the Bourgault acquisition. The company also repurchased 1.4 million shares under its NCIB program. Despite a challenging market, Linamar's EPS was $1.82, with normalized net earnings at $111.8 million, or 4.7% of sales, down 8% from the previous year. The company emphasized its strategic focus on flexibility, cost improvements, and capital reallocation, particularly in light of market shifts and tariffs affecting the industry.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.