Friday, October 24, 2008

Linamar Corporation

This stock, (TSX-LNR), is not on any on the Dividend Achievers list, nor is it on Mike Higgs’. It is a stock that I notice has been recommended lately as good value. So, I decided to look at again. I looked at this stock back in 2000 and it was not a stock I thought fit my investment philosophy. It is not a stock I would want to buy and hold. This stock reached a peak in 1997 and has not yet recovered.

If you had held this stock for the 5 years to December 2007, you would have made money. However, if you had held it for the 10 years to December 2007, you would have lost money. Part of the reason the price was high in 1997 was that the P/E ratio was much higher than it is today. In 1997, P/E was 21 and in December 2007, it was 13.

The positives on this stock are that they have made good progress in increasing sales and Earnings per Share (EPS). It has also increased the dividend by an average of 8% over the last 5 years. This is better than inflation. The Return on Equity at 11.6% average over the last 5 years is not bad.

The negatives, as I see them, are the Cash Flow has only increased over the last 5 years by 6%. This is lower than the dividend increase rate. The Book Value has only increased by 6.7% and this is also low. Given our economic situation, I doubt if this company will be making good money for a while. However, this stock is priced at $8.54 today. It has lost some 57% of its value since December 2007 and it might be of good value. I will take a look at more recent financial reports tomorrow and see the analysts are saying about this stock.

Linamar Corporation is a diversified global manufacturing company of highly engineered products. It is a world-class designer and diversified manufacturer of precision metallic components and systems for the automotive industry, and mobile industrial markets. Its web site is See my spreadsheet at

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at for a list of the stocks for which I have put up spreadsheets on my web site.

No comments:

Post a Comment