Monday, October 19, 2015

Linamar Corporation 2

On my other blog I am today writing Kathleen Gabriel's new art show in Toronto learn more...

Sound bite for Twitter and StockTwits is: Stock is expensive. Most of my stock price testing shows that the stock is relatively expensive. I also would not buy a dividend stock with a dividend yield of less than 1%. See my spreadsheet on Linamar Corporation.

I do not own this stock of Linamar Corporation (TSX-LNR, OTC-LIMAF). I looked at this stock back in 2000 and it was not a stock I thought fit my investment philosophy. In 2008 I read an article that recommended this company as a dividend stock with good value. This stock used to be on the Investment reporter portfolio stock list as an average risk stock. However, it has been taken off this list.

There is insider ownership with the CEO having shares worth around $270M and 5.9% of outstanding shares and the Chairman having shares worth around $1B and 23.5% of the outstanding share. On the other hand there was net insider selling of shares worth $15M over the past year. This is 0.34% of the outstanding shares and is relatively a lot. The median insider selling on stocks that I follow is 0.02% and 70% of the stocks I follow have insider selling at 0.09% or less.

Selling of stock is all my officers of the company. One problem can be than employees view stock options as part of their salary. Stock options for 2014 were at 0.49% of the outstanding shares. Still it does not seem that employees are wanting to keep their stock options.

The 5 year low, median and high median Price/Earnings per Share ratios are 8.31, 11.59 and 14.70. The corresponding 10 year values are close at 8.05, 9.95 and 13.62. The current P/E Ratio is 10.73 based on a stock price of $69.86 and 2015 EPS estimate of $6.51. This stock price testing suggests that the stock price is reasonable, but above the relative median.

I get a Graham Price of $66.21. The 10 year low, median and high median Price/Graham Price Ratios are 0.59, 0.78 and 1.01. The current P/GP Ratio is 1.06 based on a stock price of $69.86. This stock price testing suggests that the stock price is relatively expensive.

I get a 10 year median Price/Book Value per Share Ratio of 1.29. The current P/B Ratio is 2.33 based on a stock price of $69.86 and BVPS of $29.93. The current P/B Ratios is some 88% higher than the 1 year median P/B Ratio. This stock price testing suggests that the stock price is relatively expensive.

The 5 year median dividend yield is 1.29%. The current dividend yield is 0.57% based on dividends of $0.40 and a stock price of $69.86. The current dividend yield is 55% lower than the 5 year median dividend yield. The historical dividend yield is 1.28%. The current dividend yield at 0.57% is some 55% lower than the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive.

The analysts' recommendations are Strong Buy, Buy and Hold. Most of the recommendations are a Buy and the consensus recommendation is a Buy. The 12 month stock price consensus is $90.60. This implies a total return of 30.26% with 0.57% from dividends and 29.69% from capital gains.

There is a positive report on this company by Doug Watt at Motley Fool. The big new is its purchase of France's Auto Parts Maker Montupet S. A. Canaccord Genuity recently reduced its target price according to OCTA Finance. Pistachio Investments on Seeking Alpha thinks this company is for growth investors.

This is the second of two parts. The first part was posted on Friday, October 16, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

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 here Linamar Corporation.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

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