Should Linamar’s (TSX:LNR) Rising Earnings Amid Lower Sales Spur Portfolio Review?

• Linamar Corporation reported third quarter 2025 results, showing net income of C$169.17 million and basic earnings per share of C$2.83, both up from the prior year, despite a decline in quarterly sales to C$2.54 billion; the Board also declared a C$0.29 per share dividend for shareholders of record on November 21, 2025, payable December 2.
• This earnings improvement in the face of lower revenue highlights Linamar’s focus on operational efficiency and cost controls during a challenging period for sales.
• Given Linamar’s ability to increase profitability despite lower sales, we’ll examine how this operational resilience impacts the company’s investment outlook.

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Linamar Investment Narrative Recap

To be a Linamar shareholder, you need to believe in the company’s ability to drive earnings growth through operational efficiency and adaptability, particularly during periods of softening demand in its core Mobility and Industrial markets. The recent third quarter results reinforce Linamar’s resilience in raising profitability despite a year-over-year sales decline, but the immediate impact on the biggest short term catalyst, winning new Mobility business, appears limited as sales continue to face pressure, especially in Europe and North America. The largest risk remains persistent volume declines in these key automotive markets, which could weigh on revenue and margins if trends continue.

Of the recent announcements, the reaffirmed quarterly dividend of C$0.29 per share is especially relevant. This move signals the board’s confidence in Linamar’s ability to generate cash flow and maintain shareholder returns even as top-line growth softens, a potential support for investor sentiment while market conditions stabilize. Despite the positive earnings surprise, investors should be aware that ongoing pressure in core Mobility volumes could...

Read the full narrative on Linamar (it's free!)

Linamar's outlook anticipates CA$10.5 billion in revenue and CA$811.3 million in earnings by 2028. This scenario rests on a modest annual revenue decline of 0.3% and a substantial earnings increase of CA$553 million from the current CA$258.3 million.

Uncover how Linamar's forecasts yield a CA$63.67 fair value, a 16% downside to its current price.

Exploring Other Perspectives

Four individual fair value estimates from the Simply Wall St Community range widely from C$32.64 to C$161.74 per share. Many see value, yet margin pressure from lower automotive and agricultural volumes could temper conclusions about future returns.

Explore 4 other fair value estimates on Linamar - why the stock might be worth less than half the current price!

Build Your Own Linamar Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Linamar research is our analysis highlighting 1 key reward and 3 important warning signs that could impact your investment decision.
• Our free Linamar research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Linamar's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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