BNN Linamar stock ‘highly undervalued,’ executive chair says after Q3 earnings release
Linda Hasenfratz, executive chair of Linamar, discusses the manufacturing company's Q3 report and an anticipated decline for Q4.
The head of Linamar Corp. says the company’s shares are changing hands at a lower price than they should be considering the manufacturer’s strong performance in the third quarter amid industry challenges.
Linda Hasenfratz, executive chair of the Guelph, Ont.-based company, told BNN Bloomberg in a Wednesday interview that she was “pleased” with Linamar’s latest results, which featured sales and earnings growth even as global demand waned.
“Markets are a little soft at the moment, we’re definitely seeing customers shutting down to normalize inventories somewhat, we’re expecting the same in the fourth quarter,” she said.
“So, we were really pleased to still see a strong quarter of double-digit operating earnings growth actually in both segments and overall, and topline growth, as well as a very strong quarter for free cash flow.”
The company said on Tuesday that sales rose by 8.3 per cent year-over-year to $2.64 billion in the third quarter, while normalized operating earnings were up 14.1 per cent.
The company also announced that it will soon commence a share buyback program in the form of a normal course issuer bid to return cash to shareholders, which Hasenfratz said remains a top priority for Linamar.
“Historically that’s been mainly through a dividend program, although we have done share buybacks before. We have heard from our shareholders that they would like us to prioritize share buybacks in circumstances where we feel that the share price is undervalued,” she said.
“So, we heard that message loud and clear and we are absolutely prioritizing that share buyback because we do feel that our share price is highly undervalued at the moment.”
Linamar shares were down by roughly 1.5 per cent in early afternoon trading in Toronto on Wednesday, hovering below $60.