TSX:LNR

Stock Analysis Report

Executive Summary

Linamar Corporation manufactures and sells precision metallic components, modules, and systems in Canada, the Rest of North America, the Asia Pacific, Mexico, and Europe.


Snowflake Analysis

Undervalued with adequate balance sheet and pays a dividend.


Similar Companies

Share Price & News

How has Linamar's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: LNR has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

0.7%

LNR

2.8%

CA Auto Components

1.6%

CA Market


1 Year Return

-0.2%

LNR

5.8%

CA Auto Components

9.9%

CA Market

Return vs Industry: LNR underperformed the Canadian Auto Components industry which returned 4.2% over the past year.

Return vs Market: LNR underperformed the Canadian Market which returned 10.4% over the past year.


Shareholder returns

LNRIndustryMarket
7 Day0.7%2.8%1.6%
30 Day-1.9%-2.8%2.9%
90 Day12.4%4.5%6.4%
1 Year0.9%-0.2%8.7%5.8%13.5%9.9%
3 Year-11.5%-13.8%5.7%-4.5%17.4%6.7%
5 Year-27.9%-30.7%20.0%4.0%36.5%16.4%

Price Volatility Vs. Market

How volatile is Linamar's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Linamar undervalued compared to its fair value and its price relative to the market?

21.1%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: LNR (CA$47.44) is trading below our estimate of fair value (CA$61.07)

Significantly Below Fair Value: LNR is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: LNR is good value based on its PE Ratio (6.1x) compared to the Auto Components industry average (13.7x).

PE vs Market: LNR is good value based on its PE Ratio (6.1x) compared to the Canadian market (15.8x).


Price to Earnings Growth Ratio

PEG Ratio: LNR is poor value based on its PEG Ratio (19.7x)


Price to Book Ratio

PB vs Industry: LNR is good value based on its PB Ratio (0.8x) compared to the CA Auto Components industry average (1x).


Next Steps

Future Growth

How is Linamar forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

0.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: LNR's forecast earnings growth (0.3% per year) is below the savings rate (1.4%).

Earnings vs Market: LNR's earnings (0.3% per year) are forecast to grow slower than the Canadian market (10.3% per year).

High Growth Earnings: LNR's earnings are forecast to grow, but not significantly.

Revenue vs Market: LNR's revenue (3.2% per year) is forecast to grow slower than the Canadian market (5% per year).

High Growth Revenue: LNR's revenue (3.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: LNR's Return on Equity is forecast to be low in 3 years time (10.7%).


Next Steps

Past Performance

How has Linamar performed over the past 5 years?

10.0%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: LNR has high quality earnings.

Growing Profit Margin: LNR's current net profit margins (6.7%) are lower than last year (8.1%).


Past Earnings Growth Analysis

Earnings Trend: LNR's earnings have grown by 10% per year over the past 5 years.

Accelerating Growth: LNR's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: LNR had negative earnings growth (-16.1%) over the past year, making it difficult to compare to the Auto Components industry average (-3.4%).


Return on Equity

High ROE: LNR's Return on Equity (12.8%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Linamar's financial position?


Financial Position Analysis

Short Term Liabilities: LNR's short term assets (CA$3.0B) exceed its short term liabilities (CA$1.5B).

Long Term Liabilities: LNR's short term assets (CA$3.0B) exceed its long term liabilities (CA$2.6B).


Debt to Equity History and Analysis

Debt Level: LNR's debt to equity ratio (58.9%) is considered high.

Reducing Debt: LNR's debt to equity ratio has increased from 28.1% to 58.9% over the past 5 years.

Debt Coverage: LNR's debt is well covered by operating cash flow (39.7%).

Interest Coverage: LNR's interest payments on its debt are well covered by EBIT (17.2x coverage).


Balance Sheet

Inventory Level: LNR has a high level of physical assets or inventory.

Debt Coverage by Assets: LNR's debt is covered by short term assets (assets are 1.3x debt).


Next Steps

Dividend

What is Linamar's current dividend yield, its reliability and sustainability?

1.00%

Current Dividend Yield


Dividend Yield vs Market

company1.0%marketbottom25%1.9%markettop25%5.4%industryaverage1.9%forecastin3Years1.1%

Current dividend yield vs market & industry

Notable Dividend: LNR's dividend (1.01%) isn’t notable compared to the bottom 25% of dividend payers in the Canadian market (1.88%).

High Dividend: LNR's dividend (1.01%) is low compared to the top 25% of dividend payers in the Canadian market (5.48%).


Stability and Growth of Payments

Stable Dividend: LNR's dividends per share have been stable in the past 10 years.

Growing Dividend: LNR's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (10.9%), LNR's dividend payments are thoroughly covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: LNR's dividends in 3 years are forecast to be thoroughly covered by earnings (6.1% payout ratio).


Next Steps

Management

What is the CEO of Linamar's salary, the management and board of directors tenure and is there insider trading?

15.4yrs

Average management tenure


CEO

Linda Hasenfratz (53yo)

17.4yrs

Tenure

CA$15,437,064

Compensation

Ms. Linda S. Hasenfratz, C.M., has been the Chief Executive Officer of Linamar Corporation, an affiliate of Skyjack Inc., since August 12, 2002. Ms. Hasenfratz served as an Acting Chief Financial Officer a ...


CEO Compensation Analysis

Compensation vs Market: Linda's total compensation ($USD11.83M) is above average for companies of similar size in the Canadian market ($USD2.17M).

Compensation vs Earnings: Linda's compensation has been consistent with company performance over the past year.


Management Age and Tenure

15.4yrs

Average Tenure

55yo

Average Age

Experienced Management: LNR's management team is seasoned and experienced (15.4 years average tenure).


Board Age and Tenure

21.5yrs

Average Tenure

71.5yo

Average Age

Experienced Board: LNR's board of directors are seasoned and experienced ( 21.5 years average tenure).


Insider Trading

Insider Buying: LNR insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyCA$6,076,38214 Jan 20
Mark Stoddart
EntityIndividual
Role
Member of the Board of Directors
CTO, Executive VP of Sales & Marketing and Non-Independent Director
Shares133,900
Max PriceCA$45.38
BuyCA$19,39709 Jan 20
Michael Russell
EntityIndividual
Shares415
Max PriceCA$46.74
BuyCA$19,39306 Jan 20
Christopher Merchant
EntityIndividual
Shares397
Max PriceCA$48.85
BuyCA$19,39320 Dec 19
Roxanne Rose
EntityIndividual
Shares397
Max PriceCA$48.85
BuyCA$38,82020 Dec 19
Kenneth McDougall
EntityIndividual
Role
Unit President
Group President of Linamar Canada - Mexico Group
Shares797
Max PriceCA$48.71
BuyCA$38,82020 Dec 19
Brian Wade
EntityIndividual
Shares797
Max PriceCA$48.71
BuyCA$26,70816 Dec 19
Mark Stoddart
EntityIndividual
Role
Member of the Board of Directors
CTO, Executive VP of Sales & Marketing and Non-Independent Director
Shares557
Max PriceCA$47.95
BuyCA$39,37416 Dec 19
Dale Schneider
EntityIndividual
Role
Chief Financial Officer
Chief Financial Officer
Shares822
Max PriceCA$47.90
BuyCA$29,10616 Dec 19
Roger Fulton
EntityIndividual
Role
Chief Legal Officer
Executive VP of Human Resources
Shares607
Max PriceCA$47.95
BuyCA$2,345,50016 Dec 19
Linda Hasenfratz
EntityIndividual
Role
Chief Executive Officer
CEO & Non-Independent Director
Shares50,000
Max PriceCA$46.91
SellCA$203,45026 Aug 19
Mark Stoddart
EntityIndividual
Role
Member of the Board of Directors
CTO, Executive VP of Sales & Marketing and Non-Independent Director
Shares5,000
Max PriceCA$40.69
BuyCA$15,43215 Aug 19
Elaine Wright
EntityIndividual
Shares400
Max PriceCA$38.58
BuyCA$152,40013 Aug 19
Linda Hasenfratz
EntityIndividual
Role
Chief Executive Officer
CEO & Non-Independent Director
Shares4,000
Max PriceCA$38.10
SellCA$267,24010 Jul 19
Mark Stoddart
EntityIndividual
Role
Member of the Board of Directors
CTO, Executive VP of Sales & Marketing and Non-Independent Director
Shares6,000
Max PriceCA$44.54
SellCA$120,22409 Jul 19
Phil McCulloch
EntityIndividual
Shares2,600
Max PriceCA$46.24
SellCA$113,67529 May 19
Mark Stoddart
EntityIndividual
Role
Member of the Board of Directors
CTO, Executive VP of Sales & Marketing and Non-Independent Director
Shares2,500
Max PriceCA$45.47
SellCA$102,30011 Apr 19
Mark Stoddart
EntityIndividual
Role
Member of the Board of Directors
CTO, Executive VP of Sales & Marketing and Non-Independent Director
Shares2,000
Max PriceCA$51.15
SellCA$96,88004 Apr 19
Brad Boehler
EntityIndividual
Role
Unit President
Group President of Skyjack Inc
Shares2,000
Max PriceCA$48.44
BuyCA$9,58016 Mar 19
Elaine Wright
EntityIndividual
Shares200
Max PriceCA$47.90
BuyCA$49,89915 Mar 19
Dennis Grimm
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares1,040
Max PriceCA$47.98
SellCA$239,35015 Mar 19
Mark Stoddart
EntityIndividual
Role
Member of the Board of Directors
CTO, Executive VP of Sales & Marketing and Non-Independent Director
Shares5,000
Max PriceCA$47.87

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Frank Hasenfratz (84yo)

    Founder & Chairman of the Board

    • Tenure: 54yrs
    • Compensation: CA$12.90m
  • Linda Hasenfratz (53yo)

    CEO & Non-Independent Director

    • Tenure: 17.4yrs
    • Compensation: CA$15.44m
  • Jim Jarrell

    President & COO

    • Tenure: 15.4yrs
    • Compensation: CA$11.08m
  • Mark Stoddart (55yo)

    CTO, Executive VP of Sales & Marketing and Non-Independent Director

    • Tenure: 21yrs
  • Roger Fulton

    Executive VP of Human Resources

    • Tenure: 16.3yrs
  • Brian Ahlborn

    Group President of Linamar Machining & Assembly - Europe & Linamar Montupet Casting

    • Ken McDougall

      Group President of Linamar Canada - Mexico Group

      • Compensation: CA$2.04m
    • Dale Schneider

      Chief Financial Officer

      • Tenure: 8.2yrs
      • Compensation: CA$1.16m
    • Brad Boehler

      Group President of Skyjack Inc

      • Tenure: 8yrs

    Board Members

    • William Harrison (80yo)

      Independent Director

      • Tenure: 30yrs
      • Compensation: CA$66.04k
    • Frank Hasenfratz (84yo)

      Founder & Chairman of the Board

      • Tenure: 54yrs
      • Compensation: CA$12.90m
    • Linda Hasenfratz (53yo)

      CEO & Non-Independent Director

      • Tenure: 17.4yrs
      • Compensation: CA$15.44m
    • Mark Stoddart (55yo)

      CTO, Executive VP of Sales & Marketing and Non-Independent Director

      • Tenure: 21yrs
    • Terry Reidel (75yo)

      Independent Director

      • Tenure: 17yrs
      • Compensation: CA$73.49k
    • Dennis Grimm (68yo)

      Independent Director

      • Tenure: 5.7yrs
      • Compensation: CA$64.99k

    Company Information

    Linamar Corporation's company bio, employee growth, exchange listings and data sources


    Key Information

    • Name: Linamar Corporation
    • Ticker: LNR
    • Exchange: TSX
    • Founded: 1966
    • Industry: Auto Parts and Equipment
    • Sector: Automobiles
    • Market Cap: CA$3.092b
    • Shares outstanding: 65.24m
    • Website: https://www.linamar.com

    Number of Employees


    Location

    • Linamar Corporation
    • 287 Speedvale Avenue West
    • Guelph
    • Ontario
    • N1H 1C5
    • Canada

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    LNRTSX (The Toronto Stock Exchange)YesCommon SharesCACADJan 1986
    LNRDB (Deutsche Boerse AG)YesCommon SharesDEEURJan 1986
    LIMA.FOTCPK (Pink Sheets LLC)YesCommon SharesUSUSDJan 1986

    Biography

    Linamar Corporation manufactures and sells precision metallic components, modules, and systems in Canada, the Rest of North America, the Asia Pacific, Mexico, and Europe. It operates through two segments, Industrial and Transportation. The company offers hybrid power units, power transfer units, rear drive units/modules, and engineered gears; and shaft and shell assemblies, differential assemblies, transmission gears, clutch modules, center housings, transmission/driveline shafts, transfer case pump housings, and other transmission components. It also provides cylinder blocks, cylinder heads, connecting rods, camshafts, flywheels, fuel rails, pumps and bodies, balance shaft modules, fuel injector bodies, fuel pump housings, and turbo charger housings; and wheel hubs and bearings, axle shafts, and steering knuckles. In addition, the company offers precision machined castings and metallic assemblies; planetary carriers, gearbox housings, bearing housings, and torque arms; aluminum castings; and freight solutions. Further, it provides mobile industrial and harvesting equipment, aerial work platforms, telehandlers, draper headers, and self-propelled windrowers; markets corn and sunflower heads under the Harvestec and OROS brands; and produces assemblies for hay rake equipment, track modules for tracked construction equipment and tractors, combine head trailers, and other agricultural related fabrications and systems. It serves automotive, commercial vehicle, off highway, marine and recreational, industrial, aerial work platforms, energy, and agricultural industries. Linamar Corporation was founded in 1966 and is headquartered in Guelph, Canada. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/17 23:37
    End of Day Share Price2020/01/17 00:00
    Earnings2019/09/30
    Annual Earnings2018/12/31


    Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.