Linamar - $10/share EPS in 2024?Linamar is undervalued. Future earning are not clear with the latest acquisitions which presents an opportunity heading into 2024 at the current share price.
Pending a normal year, I expect >$10 Billion in sales and $10 EPS. Stock trades like a distressed automotive supplier with high debt load.
EV/EBITDA comparison:
Linamar - 4.1
Martinrea - 3.6 (Automotive, high debt)
Magna - 10 (Automotive)
American Axle - 4.9 (Automotive, high debt)
Dana - 5.9 (Automotive)
Borg Warner - 5.25 (Automotive)
Terex - 6.3 (Genie, Industrial)
Oshkosh - 8.9 (JLG, Industrial)
Agco - 5.9 (Agriculture)
CNH - 8.3 (Agriculture)
Deere - 9.5 (Agriculture)
Linamar has become a diversified manufacturer. Over half the earnings are non automotive. Should trade minimum 6X EV/EBITDA.
Insider ownership 35%. Continues to have very strong balance sheet despite acquisitions.
Have not had a full quarter of earnings from latest acquisitions. Dura, Mobex, Bourgault full earnings and sales will not be known until Q2 next year.
High margin of safety at current share price. P/E 6.
Headwinds are continued mobility sector margins, recession and slowdown of electrification projects.
Opportunity for all time high and triple digit share price next year.
High risk/reward at current share price. $105-$125 target price.
Would like to see consistent share repurchases as part of capital allocation.