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Linamar Corp. (TSE:LNR)
TSX:LNR
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Linamar
(TSX:LNR)
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Rating:77Outperform
Price Target:
C$89.00
▲(2.88% Upside)
Linamar's overall stock score reflects a strong financial foundation and positive technical indicators, despite challenges in revenue growth and industrial segment performance. The company's ability to generate free cash flow and manage tariffs effectively are significant strengths, while valuation concerns and market challenges pose risks.
Positive Factors
Mobility Segment Growth
The growth in the Mobility segment with strong margins indicates Linamar's ability to capitalize on automotive trends, supporting long-term revenue stability.
Strong Free Cash Flow
Robust free cash flow generation enhances Linamar's financial flexibility, enabling strategic investments and shareholder returns over time.
Market Share Gains
Consistent market share gains demonstrate competitive strength and resilience, positioning Linamar well against industry headwinds.
Negative Factors
Sales Decline
A significant sales decline, particularly in the industrial segment, suggests challenges in maintaining growth, impacting long-term revenue prospects.
Industrial Segment Challenges
The downturn in the industrial segment, driven by weak agricultural markets, could hinder Linamar's diversification efforts and revenue stability.
Soft Agricultural Markets
A projected decline in the agricultural market poses risks to Linamar's industrial segment, affecting overall growth and profitability.
Linamar (LNR) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$5.11B
Dividend Yield1.32%
Average Volume (3M)94.25K
Price to Earnings (P/E)21.1
Beta (1Y)1.26
Revenue Growth-5.33%
EPS Growth-57.58%
CountryCA
Employees32,000
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Parts
Share Statistics
EPS (TTM)2.51
Shares Outstanding59,809,486
10 Day Avg. Volume76,957
30 Day Avg. Volume94,251
Financial Highlights & Ratios
PEG Ratio-0.28
Price to Book (P/B)0.64
Price to Sales (P/S)0.33
P/FCF Ratio5.88
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$88.24Price Target Upside2.00% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering4
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Linamar Business Overview & Revenue Model
Company DescriptionLinamar Corporation, together with its subsidiaries, design, develop, and produce engineered products in Canada, North America, Europe, and the Asia Pacific. It operates through two segments, Mobility and Industrial. The Mobility segment engages in the design, development, and manufacture of precision metallic components, modules, and systems for vehicle and power generation markets. It manufactures precision-machined components and assemblies that are used in transmissions, engines, and driveline systems; driveline systems, such as power transfer units, rear-drive units, and engineered gears; and engine components, including cylinder blocks and assemblies, cylinder heads and complete head assemblies, camshaft assemblies, connecting rods, flywheels, fuel rails, and fuel body/pumps. This segment also offers transmission cases, shafts, shaft and shell assemblies, clutch modules and clutch subcomponents, valve bodies, pumps, planetary gear assemblies, and housings/covers. It serves automotive original equipment manufacturers and commercial vehicle customers. The Industrial segment designs and produces mobile products, such as compact and rough terrain scissor lifts, vertical mast lifts, booms, and telehandlers primarily to construction equipment rental companies. This segment also offers harvesting equipment, including combine grain header attachments, self-propelled windrowers, pick-up headers, and hay products; and combine corn header attachments. Linamar Corporation has a strategic alliance with Ballard Power Systems Inc. for the co-development and sale of fuel cell powertrains and components for class 1 and 2 vehicles in North America and Europe. Linamar Corporation was founded in 1964 and is headquartered in Guelph, Canada.
How the Company Makes MoneyLinamar generates revenue through several key streams, primarily from the sale of its manufactured products to automotive and industrial clients. The company's revenue model is built on long-term contracts and relationships with major automotive OEMs (Original Equipment Manufacturers), which provide a stable demand for its components. In addition to traditional automotive parts, Linamar's expansion into industrial sectors, including renewable energy and aerospace, contributes to its earnings by tapping into growing markets with increasing demand for advanced manufacturing solutions. Significant partnerships with leading automotive manufacturers enhance Linamar's market position and provide opportunities for joint ventures and collaborative development projects, further driving revenue growth. The company's investment in technology and innovation also plays a crucial role in increasing efficiency and reducing costs, thereby bolstering its profitability.
Linamar Earnings Call Summary
Earnings Call Date:Aug 13, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Mar 04, 2026
Earnings Call Sentiment Neutral
The earnings call highlights a strong performance in the Mobility segment and effective tariff management, contributing to significant free cash flow and market share gains. However, there are notable challenges in the industrial segment with significant sales declines and soft agricultural markets. The overall sentiment is mixed with strong positives in certain areas but ongoing challenges in others.Q2-2025 Updates
Positive Updates
Strong Free Cash Flow
Achieved nearly $180 million in free cash flow, driven by strong earnings and careful management of CapEx and working capital.
Mobility Segment Growth
Mobility segment saw 20% operating earnings growth with margins back in the normal range of 6% to 8%.
Tariff Strategy Success
Minimal impact from U.S. tariffs due to a long-term strategy of producing products on the same continent as customers.
Market Share Gains
Achieved market share gains in every business, helping to offset soft markets.
Recognition as Supplier of the Year
Awarded Supplier of the Year by Ford Motor Company for crisis management during Hurricane Helene.
Negative Updates
Sales Decline
Overall sales were down 7% over last year, with a 22% decline in the industrial business.
Industrial Segment Challenges
Industrial sales decreased by 22.4%, primarily due to lower agricultural and access equipment sales.
Global Market Declines
Global vehicle production volumes decreased by 3.8% in North America and 2% in Europe.
Soft Agricultural Markets
The large ag industry is expected to decline by 30% year-over-year in North America.
Mobility Sales Decline
Mobility sales decreased by 0.4% over Q2 last year, due to downturns in European and North American automotive markets, including EVs.
Company Guidance
During the Linamar Second Quarter 2025 Earnings Conference Call, Linda Hasenfratz provided detailed guidance, highlighting several key metrics. The Mobility segment saw a 20% growth in operating earnings, with margins returning to the normal range of 6% to 8%, demonstrating the company's ability to generate strong cash flow, nearly $180 million in free cash flow, despite a 7% overall sales decline to $2.6 billion. The Mobility segment's sales remained flat, while the Industrial segment experienced a significant 22% decrease. The company's net debt-to-EBITDA ratio was 1.02, indicating a strong balance sheet. Linamar also repurchased shares under its NCIB program, spending nearly $100 million. Despite challenges, the company is optimistic about continued free cash flow generation and plans to be active in share repurchases in the upcoming quarter.Linamar Financial Statement Overview
Summary
Linamar demonstrates a solid financial position with stable margins and a strong balance sheet. The company faces challenges in revenue growth and net profit margins, but maintains operational efficiency and a healthy cash flow. The moderate leverage and strong equity position provide a stable foundation for future growth.Income Statement
Linamar's income statement shows a mixed performance. The company has maintained a stable gross profit margin around 14-15% over the years, indicating consistent cost management. However, the net profit margin has decreased to 2.06% in the TTM period, reflecting challenges in converting revenue into profit. The revenue growth rate is negative in the TTM period, suggesting a decline in sales compared to the previous year. Despite these challenges, the EBIT and EBITDA margins remain healthy, indicating operational efficiency.Balance Sheet
The balance sheet reflects a strong equity position with a debt-to-equity ratio of 0.38 in the TTM period, indicating moderate leverage. The return on equity has decreased to 3.71% in the TTM period, suggesting reduced profitability for shareholders. However, the equity ratio remains robust, highlighting a solid financial foundation. Overall, the balance sheet shows stability with manageable debt levels.Cash Flow
Linamar's cash flow statement indicates a positive trend in free cash flow growth, with a 10% increase in the TTM period. The operating cash flow to net income ratio is stable, suggesting efficient cash generation relative to net income. However, the free cash flow to net income ratio is 0.68, indicating a moderate conversion of net income into free cash flow. The company shows a healthy cash flow position, but there is room for improvement in cash conversion.| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 25.27B | 10.58B | 9.73B | 7.92B | 6.54B | 5.82B |
| Gross Profit | 3.68B | 1.50B | 1.32B | 974.81M | 937.65M | 802.56M |
| EBITDA | 3.90B | 1.52B | 1.27B | 986.06M | 1.02B | 894.10M |
| Net Income | 821.29M | 258.26M | 503.05M | 426.19M | 420.56M | 279.13M |
Balance Sheet | ||||||
| Total Assets | 10.97B | 10.50B | 9.85B | 8.58B | 7.39B | 7.56B |
| Cash, Cash Equivalents and Short-Term Investments | 1.23B | 1.05B | 653.33M | 860.51M | 928.43M | 861.10M |
| Total Debt | 2.16B | 2.29B | 1.77B | 1.31B | 791.54M | 1.30B |
| Total Liabilities | 4.95B | 5.07B | 4.53B | 3.76B | 2.79B | 3.20B |
| Stockholders Equity | 6.02B | 5.43B | 5.32B | 4.81B | 4.60B | 4.35B |
Cash Flow | ||||||
| Free Cash Flow | 2.47B | 593.68M | -17.34M | 37.06M | 666.40M | 1.15B |
| Operating Cash Flow | 3.35B | 1.13B | 745.37M | 447.71M | 909.46M | 1.41B |
| Investing Cash Flow | -780.75M | -1.12B | -1.19B | -715.74M | -267.32M | -290.31M |
| Financing Cash Flow | -1.41B | 363.68M | 255.57M | 176.81M | -572.77M | -593.41M |
Linamar Technical Analysis
Positive
86.51
Price Trends
79.55
Positive
77.00
Positive
68.23
Positive
Market Momentum
1.85
Negative
66.42
Neutral
74.73
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:LNR, the sentiment is Positive. The current price of 86.51 is above the 20-day moving average (MA) of 83.28, above the 50-day MA of 79.55, and above the 200-day MA of 68.23, indicating a bullish trend. The MACD of 1.85 indicates Negative momentum. The RSI at 66.42 is Neutral, neither overbought nor oversold. The STOCH value of 74.73 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:LNR.
Linamar Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | C$21.96B | 15.24 | 8.31% | 3.69% | 0.66% | -0.61% | |
77 Outperform | C$2.70B | 14.59 | 10.45% | 7.11% | 3.19% | -0.26% | |
77 Outperform | C$5.11B | 21.10 | 4.01% | 1.32% | -5.33% | -57.58% | |
71 Outperform | C$258.16M | 10.76 | 6.05% | 6.21% | -3.53% | -17.19% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
52 Neutral | C$1.84B | -4.69 | -52.38% | ― | 14.40% | -1117.18% | |
51 Neutral | $762.09M | -18.50 | -2.64% | 1.93% | -7.25% | -143.07% |
* Consumer Cyclical Sector Average
TSE:LNR
Linamar
86.51
32.68
60.72%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.