Linamar (LNR) AI Stock Analysis

• Market Cap: $4.35B
• Dividend Yield: 1.44%
• Average Volume (3M): 124.71K
• Price to Earnings (P/E): 20.7
• Beta (1Y): 1.18
• Revenue Growth: -2.60%
• EPS Growth: -64.22%
• Country: CA
• Employees: 32,000
• Sector: Consumer Cyclical
• Sector Strength: 70
• Industry: Auto - Parts
• EPS (TTM): 2.81
• Shares Outstanding: 59,809,586
• 10 Day Avg. Volume: 163,171
• 30 Day Avg. Volume: 124,714
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.17
• Enterprise Value/Revenue: 0.50
• Enterprise Value/Gross Profit: 3.42
• Enterprise Value/Ebitda: 4.38
• 1Y Price Target: $78.40
• Price Target Upside: 8.85% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5

• Rating: 74 Outperform
• Price Target: C$82.00 ▲(13.84% Upside)

Linamar's overall stock score reflects a stable financial position with strong cash flow generation and operational efficiency. The technical analysis indicates strong momentum, although overbought conditions suggest caution. Valuation appears high, and the earnings call highlights both strengths in the Mobility segment and challenges in the industrial segment. The company's proactive approach to share repurchases and cash flow management is a positive factor.

Positive Factors

Financial Performance

The target price for Linamar Corp. has increased to $80, indicating a positive outlook.

Market Performance

Skyjack volumes notably outperformed industry, driven by share gains in North America particularly in scissor lifts.

Strategic Opportunities

Linamar Corp is seeing inquiries from OEMs about reshoring parts, which is viewed as an incremental opportunity for North American manufacturing.

Negative Factors

Industry Outlook

The industrial segment's outlook has worsened with a 'double-digit' sales decline expected in 2025.

Market Demand

Management noted access equipment demand is staying sluggish for longer than initially expected.

Tariff Uncertainty

The share price upside is likely to be limited until there is clarity on the tariff outlook for the Mobility segment.

Linamar Business Overview & Revenue Model

Company Description

Linamar Corporation (LNR) is a diversified manufacturing company based in Canada, primarily operating in the automotive, industrial, and agricultural sectors. It specializes in precision machining, assembly, and the development of complex components and systems. The company offers a wide range of products, including powertrain and driveline components, mobility solutions, and products for the agriculture and construction industries.

How the Company Makes Money

Linamar generates revenue through several key streams, including the manufacture and sale of automotive components, which account for a significant portion of its earnings. The company partners with major automotive manufacturers, providing them with essential parts and systems that are integral to vehicle performance. Additionally, Linamar's industrial segment, which includes products for agricultural and construction equipment, contributes to its revenue through both direct sales and long-term contracts with clients. The company's focus on innovation and technology-driven solutions allows it to enhance its product offerings and maintain competitive pricing, further driving profitability. Strategic alliances and partnerships with other industry players also play a crucial role in expanding Linamar's market reach and enhancing its revenue potential.

Linamar Financial Statement Overview

Summary

Linamar demonstrates strong revenue growth and a solid balance sheet, with a healthy cash flow generation. However, profitability margins have faced pressure, indicating a need for improved operational efficiency.

Income Statement

Linamar has shown a strong revenue growth trajectory with TTM revenue reaching approximately CAD 10.39 billion, up from CAD 7.92 billion in 2022. The gross profit margin remains healthy at around 14.56% in TTM. However, the EBIT margin has slightly decreased to 5.85% in TTM from 7.74% in 2023, reflecting some operational efficiency challenges. The net profit margin has also declined from 5.17% in 2023 to 2.48% in TTM, indicating potential pressures on profitability.

Balance Sheet

The balance sheet is robust with a debt-to-equity ratio of 0.39 in TTM, indicating prudent leverage management. The equity ratio stands strong at 52.84%, showing a solid equity base relative to total assets. The return on equity (ROE) is relatively low at 4.56% in TTM, suggesting room for improvement in generating returns on equity.

Cash Flow

The cash flow statements show positive trends with a solid free cash flow of CAD 780 million in TTM, reflecting a 13% growth from 2024. The operating cash flow to net income ratio is favorable at 4.82, indicating strong cash generation relative to earnings. However, the free cash flow to net income ratio has decreased to 3.03, reflecting potential challenges in free cash flow conversion.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	10.19B	10.58B	9.73B	7.92B	6.54B	5.82B
Gross Profit	1.49B	1.50B	1.32B	974.81M	937.65M	788.42M
EBITDA	1.16B	1.21B	1.26B	1.04B	1.07B	923.79M
Net Income	210.25M	258.26M	503.05M	426.19M	420.56M	279.13M
Balance Sheet
Total Assets	10.78B	10.50B	9.85B	8.58B	7.39B	7.56B
Cash, Cash Equivalents and Short-Term Investments	1.00B	1.05B	653.33M	860.51M	928.43M	861.10M
Total Debt	2.21B	2.29B	1.77B	1.31B	791.54M	1.30B
Total Liabilities	4.98B	5.07B	4.53B	3.76B	2.79B	3.20B
Stockholders Equity	5.80B	5.43B	5.32B	4.81B	4.60B	4.35B
Cash Flow
Free Cash Flow	916.31M	690.34M	3.26M	44.88M	654.22M	1.14B
Operating Cash Flow	1.34B	1.25B	793.55M	468.13M	908.76M	1.43B
Investing Cash Flow	-357.23M	-1.12B	-1.19B	-715.74M	-267.32M	-290.31M
Financing Cash Flow	-744.33M	235.92M	207.40M	156.39M	-572.08M	-616.41M

Linamar Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 72.03
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 72.03 is above the 20-day moving average (MA) of 69.65, above the 50-day MA of 66.97, and above the 200-day MA of 58.33, indicating a bullish trend. The MACD of 1.75 indicates Negative momentum. The RSI at 64.80 is Neutral, neither overbought nor oversold. The STOCH value of 79.58 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

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MG	76 Outperform	$17.37B	10.45	10.06%	4.41%	-0.54%	26.31%
LNR	74 Outperform	$4.35B	20.70	3.61%	1.44%	-2.60%	-64.22%
XTC	64 Neutral	$252.82M	10.70	6.01%	6.38%	-3.50%	-22.76%
MRE	62 Neutral	$695.12M	5.65	-4.10%	2.14%	-8.84%	-148.15%
Sector *	61 Neutral	$17.42B	12.39	-5.38%	3.12%	1.53%	-15.37%
CAS	60 Neutral	$1.01B	―	-0.47%	4.86%	2.77%	81.01%
NFI	53 Neutral	C$2.23B	―	-26.25%	―	9.12%	-182.49%