Post by
Jonathan9 on Dec 25, 2023 2:19pm
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.
Comment by
Jonathan9 on Mar 07, 2024 12:38am
Should continue to outperform but multiple is worse than peers with one of the best balance sheets?
Comment by
HyperCube on Mar 07, 2024 10:28am
Yes. We had *only* $8.17 earnings per share in 2023. But we all know that interest rates are going down this year, this will help increase earnings, which were probably going to go up even without the help of lower interest rates.