Tuesday, October 10, 2017

Linamar Corporation

Sound bite for Twitter and StockTwits is: Dividend Growth Industrial. Dividends have grown over time. They are quite low at the moment and I would not buy this until dividend yield was again at least over 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 now been taken off this list.

This company raised their dividends some 20% this year. This is after holding them steady for two years. This company has always been quite inconsistent in their dividend growth. They have increased and decreased their dividends at different points in time. The dividend growth over the past 5 and 10 years is at 4.56% and 5.24% per year to the end of 2016 and 8.45% and 7.18% per year over the past 5 and10 years to date.

Dividends are quite low generally with the dividend yield often below 1%. The current dividend yield is 0.62%. Their corresponding Dividend Payout Ratio is very low. The DPR for 2016 is 5.05% with 5 year coverage of 7.3%.

Even though the dividends have been inconsistent, holding this stock long term would work. I have data for the past 22 years. Over that time period the stock price has increased by 791% and if you look at price and dividends, the return over the past 22 years is 11.63% per year. The return over some 5 year periods during this 22 year period has been negative. For example, the total return for the 5 year ending in 2008 is a negative 17.11% per year. However in 2013, the total return for the past 5 years was 66.95% per year.

It is interesting that the dividend yield was 1.48% at the beginning of the period and 2.32% at the end when the 5 year total return was a negative 17.11% per year. For the 5 year period with the total return at 66.95% per, the dividend yield started at 2.32% and ended at 0.96%.

The Liquidity Ratio has been decent to good over the years. The ratio for 2016 is 1.69 with a 5 year median of 1.72. The Debt Ratio is at 1.98 in 2016 with a 5 year median of 1.97. The Leverage and Debt/Equity Ratios are in 2016 at 2.02 and 1.02 with 5 year medians of 2.01 and 1.01. It is good debt ratios that help companies get through the bad time.

The 5 year low, median and high median Price/Earnings per Share Ratios are 6.45, 9.50 and 12.55. The 10 year ratios are 7.38, 10.68 and 14.04. The historical ones are 8.76, 11.65 and 15.56. The current P/E Ratio is 9.37 based on a stock price of $77.93 and 2017 EPS estimate of $8.32. This stock price testing suggests that the stock price is reasonable and below the median.

I get a Graham Price of $91.49. The 10 year low, median and high median Price/Graham Price Ratios are 0.57, 0.82 and 1.07. The current P/GP Ratio is 0.85 based on a stock price of $77.93. This stock price testing suggests that the stock price is reasonable and around the median.

The Price/Book Value per Share Ratio is 1.43. The current P/B Ratio is 1.74 based on Book Value per Share of $2,917M, BVPS of $44.71 and a stock price of $77.93. The current P/B Ratio is some 22% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

The historical median dividend yield is 1.24%. The current dividend yield is 0.62% based on dividends of $0.48 and a stock price of $77.93. The current dividend yield is 50% lower than the historical median. This stock price testing suggests that the stock price is relatively expensive.

When I look at analysts' recommendations, I find Buy (4), Hold (4) and Underperform (1) recommendations. The consensus recommendation would be a Hold. The 12 month stock price consensus is $78.00. This implies a total return of 0.71% with 0.09% from capital gains and 0.62% from dividends.

Stefani Robinson on True Blue Tribune says analysts have differing view of this company with CIBC raising their 12 month stock price to $81.00 and TD lowering it to $72.00. Jacquelyn LeBel on Global News talks about Linamar funding University Scholarships for women in Engineering and Business program at Western University. MTNV Staff Contributor says on MTNV given technical information including that this stock is undervalued. See what analysts are saying about this company on Stock Chase. They generally like this company but think maybe this is not the time to buy.

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.

The last stock I wrote about was about was K-Bro Linen Inc. (TSX-KBL, OTC-KBRLF)... learn more The next stock I will write about will be Enbridge Income Fund Holdings Inc. (TSX-ENF, OTC-EBGUF)... learn more on Wednesday, October 11, 2017 around 5 pm. Today on my other blog I will write about Money Show 2017 - Sid Mokhtari... learn more on Tuesday, October 10, 2017 around 5 pm.

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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

1 comment:

  1. Linamar's sky jack is a pretty good product. Might be a good investment.