Linamar (LNR) AI Stock Analysis

• Market Cap: $4.66B
• Dividend Yield: 1.39%
• Average Volume (3M): 132.27K
• Price to Earnings (P/E): 21.9
• Beta (1Y): 1.20
• Revenue Growth: -2.60%
• EPS Growth: -64.22%
• Country: CA
• Employees: 32,000
• Sector: Consumer Cyclical
• Sector Strength: 75
• Industry: Auto - Parts
• EPS (TTM): 2.81
• Shares Outstanding: 59,809,586
• 10 Day Avg. Volume: 134,182
• 30 Day Avg. Volume: 132,273
• 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: 1.09
• Enterprise Value/Revenue: 0.50
• Enterprise Value/Gross Profit: 3.42
• Enterprise Value/Ebitda: 4.38
• 1Y Price Target: $81.25
• Price Target Upside: 4.34% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5

• Rating: 74 Outperform
• Price Target: C$82.00 ▲(5.30% 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.

Linamar Business Overview & Revenue Model

Company Description

Linamar 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 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: 77.87
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

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 77.87 is above the 20-day moving average (MA) of 74.66, above the 50-day MA of 70.28, and above the 200-day MA of 59.35, indicating a bullish trend. The MACD of 2.20 indicates Negative momentum. The RSI at 76.21 is Negative, neither overbought nor oversold. The STOCH value of 84.11 is Negative, 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
LNR	74 Outperform	$4.66B	21.93	3.61%	1.39%	-2.60%	-64.22%
Sector *	61 Neutral	$18.09B	12.97	-1.60%	2.98%	1.42%	-15.92%
MGA	―	$12.91B	10.75	10.06%	4.12%	―	―
EXCOF	―	$189.57M	10.95	6.01%	6.14%	―	―
MRETF	―	$572.66M	5.32	-4.10%	1.84%	―	―
NFI	53 Neutral	C$2.18B	―	-26.25%	―	9.12%	-182.49%
CADNF	―	$722.90M	―	-0.47%	4.77%	―	―