Is it a good company at a reasonable price? This company has not done well in capital gains to the end of 2024 for years 5 and 10. The stock price up almost 35% in 2025, but this still does not give you much in the way of capital gains over the past 5 and 10 years. The stock price has really gone nowhere in the past 10 years. It cannot seem to break through its past highs. Although there has been growth in Revenue and Adjusted Earnings over the past 5 and 10 years. See chart below. The stock price is testing as reasonable, but the dividend testing is saying the stock price is relatively cheap.
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. It is on the Money Saving list of Top 100 Canadian Dividend stocks. (It was still on this list in 2025.)
When I was updating my spreadsheet, I noticed EPS was lower because Finance Expenses went up some 90% from $71M to $135M. They also had a Goodwill impairment. The total return because of capital gains is low over the past 5 and 10 years. The stock is up some 33.8% this year, but the 5 year total return to date is still only 3.68% with 2.42% from capital gains and 1.26% from dividends (because the stock went higher 5 years to date). The Graham Price Ratios are really low with the current one at 0.52. Normally, you would expect ratios from around 0.80 to 1.20.
In the chart below, I am showing 5 and 10 year total growth and per year growth in columns 3 and 4. Column 5 shows growth expected over 12 months to the second quarter in 2024 and expected growth over this year. You can see that Revenue is up over the past 5 and 10 years as is Adjusted Earnings. Cash flow seems to be up a lot for this year, but it is only up 19% for 2023.
| Yr | Item | Tot. Gwth | Per Year | Gwth | Coverage |
|---|---|---|---|---|---|
| 5 | Revenue Growth | 42.68% | 7.37% | -3.74% | <-12 mths |
| 5 | AEPS Growth | 38.56% | 6.74% | -0.82% | <-12 mths |
| 5 | Net Income Growth | -40.00% | -9.71% | -18.59% | <-12 mths |
| 5 | Cash Flow Growth | 7.40% | 1.44% | 6.67% | <-12 mths |
| 5 | Dividend Growth | 108.33% | 15.81% | 12.00% | <-12 mths |
| 5 | Stock Price Growth | 15.59% | 2.94% | 33.83% | <-12 mths |
| 10 | Revenue Growth | 153.67% | 9.76% | -5.19% | <-this year |
| 10 | AEPS Growth | 100.20% | 7.19% | 2.65% | <-this year |
| 10 | Net Income Growth | -19.44% | -2.14% | 132.49% | <-this year |
| 10 | Cash Flow Growth | 129.45% | 8.66% | -36.68% | <-this year |
| 10 | Dividend Growth | 150.00% | 9.60% | 12.00% | <-this year |
| 10 | Stock Price Growth | -19.96% | -2.20% | 43.83% | <-this year |
The dividends are low, so if you buy this stock what sort of dividends would you get in the future? This chart is an attempt to show this. If dividends continue to increase by 16% as they have in the past 5 years, what you would get in dividends in 5, 10 and 15 years is shown in the Dividends Paid (Div Pd) column. The next column shows what your yield on the current stock price of $76.00 would be. The last column shows the percentage of your stock’s price would be covered by dividends in 5, 10 and 15 years.
| Div Pd | Div Yield | Years | At IRR | Div Cov |
|---|---|---|---|---|
| $1.81 | 2.05% | 5 | 16.00% | 6.72% |
| $3.79 | 4.31% | 10 | 16.00% | 18.79% |
| $7.96 | 9.05% | 15 | 16.00% | 44.12% |
If you had invested in this company in December 2014, for $1,064.25 you would have bought 15 shares at $70.95 per share. In December 2024, after 10 years you would have received $89.40 in dividends. The stock would be worth $851.85. Your total return would have been $941.25. This would be a total loss of 1.26% per year with 2.20% from capital loss and 0.94% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $70.95 | $1,064.25 | 15 | 10 | $89.40 | $851.85 | $941.25 |
The current dividend yield is low with dividend growth good. The current dividend yield is low (below 2%) at 1.53%. The 5, 10 and historical dividend yields are low at 1.25%, 0.84%, 1.21%. The dividend growth is good (15% per year or higher) at 15.8% per year over the past 5 years. The last dividend increase was in 2025 and it was for 16%.
The Dividend Payout Ratios (DPR) are good. The DPR for 2024 for Earnings per Share (EPS) is good at 24% with 5 year coverage at 13%. The DPR for 2024 for Adjusted Earnings per Share (AEPS) is good at 10% with 5 year coverage at 10%. The DPR for 2024 for Cash Flow per Share (CFPS) is good at 4% with 5 year coverage at 5%. The DPR for 2024 for Free Cash Flow (FCF) is good at 8% with 5 year coverage at 10%. For 2024, FCF varies from $594M to $700M.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 23.87% | 12.52% |
| AEPS | 10.19% | 10.18% |
| CFPS | 4.16% | 4.69% |
| FCF | 7.99% | 9.70% |
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2024 is fine at 0.65 and currently at 0.56. The Liquidity Ratio for 2024 is good at 1.85 and 1.80 currently. The Debt Ratio for 2024 is good at 2.07 and 2.17 currently. The Leverage and Debt/Equity Ratios for 2024 are good at 1.93 and 0.93 and currently at 1.86 and 0.86.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.65 | 0.56 |
| Intang/GW | 0.57 | 0.42 |
| Liquidity | 1.85 | 1.80 |
| Liq. + CF | 2.33 | 2.08 |
| Debt Ratio | 2.07 | 2.17 |
| Leverage | 1.93 | 1.86 |
| D/E Ratio | 0.93 | 0.86 |
The Total Return per year is shown below for years of 5 to 36 to the end of 2024. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2019 | 5 | 15.81% | 4.35% | 2.94% | 1.41% |
| 2014 | 10 | 9.60% | -1.26% | -2.20% | 0.94% |
| 2009 | 15 | 15.18% | 11.57% | 9.82% | 1.75% |
| 2004 | 20 | 9.60% | 8.10% | 6.74% | 1.35% |
| 1999 | 25 | 7.61% | 7.23% | 6.01% | 1.22% |
| 1994 | 30 | 8.52% | 9.02% | 7.51% | 1.51% |
| 1989 | 35 | 16.30% | 13.07% | 3.22% | |
| 1988 | 36 | 14.53% | 12.00% | 2.53% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 7.00, 11.19 and 13.83. The corresponding 10 year ratios are 6.80, 8.92 and 10.92. The corresponding historical ratios are 8.31, 11.59 and 15.18. The current ratio is 7.71 based on a stock price of $76.00 and EPS estimate for 2025 of $9.86. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 6.47, 9.93 and 12.96. The corresponding 10 year ratios are 6.09, 7.90 and 9.48. The corresponding historical ratios are 6.47, 9.85 and 12.55. The current ratio is 7.55 based on a stock price of $76.00 and AEPS estimate for 2025 of $10.07. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $146.96. The 10-year low, median, and high median Price/Graham Price Ratios are 0.44, 0.59 and 0.80. The current ratio is 0.52 based on a stock price of $76.00. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10-year median Price/Book Value per Share Ratio of 0.92. The current ratio is 0.80 based on a stock price of $76.00, Book Value of $5,804.5M and Book Value per Share of $95.32. The current ratio is 14% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 5.39. The current ratio is 4.04 based on a stock price of $76.00, Cash Flow per Share estimate for 2025 of $18.80, and Cash Flow of $794M. The current ratio is 35% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 1.21%. The current dividend yield is 1.53% based on dividends of $1.16 and a stock price of $76.00. The current dividend yield is 26% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 0.84%. The current dividend yield is 1.53% based on dividends of $1.16 and a stock price of $76.00. The current dividend yield is 81% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 0.53. The current P/S Ratio is 0.46 based on Revenue estimate for 2025 of $10,033, Revenue per Share of $164.76 and a stock price of $76.00. The current ratio is 12% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is probably reasonable, but might be cheap. The dividend yield testing is saying that the stock price is cheap. The P/S Ratio testing says that the stock price is relatively reasonable. Most, but not all, of the other testing is saying that the stock price is reasonable. The Price/Cash Flow Ratio test is saying that the stock price is relatively cheap.
When I look at analysts’ recommendations, I find Strong Buy (3), and Hold (3). The consensus would be a Buy. The 12 month stock price consensus is $81.67 with a high of $87.00 and low of $78.00. The consensus stock price of $81.67 implies a total return of 8.99% with 7.46% from capital gains and 1.53% from dividends based on a current stock price of $76.00.
This stock seemed to be a buy or top pick on Stock Chase when the stock price was below $50.00. Amy Legate-Wolfe on Motley Fool was recommending this stock as a good deal when it was trading around $62.00. The company put out a press release via Global Newswire about their results for 2024. The company put out a press release via Global Newswire about their second quarter of 2025.
Simply Wall Street via Yahoo Finance and concludes that this business is worth watching in the long term. Simply Wall Street has two warnings out on this stock of large one-off items impacting financial results; and profit margins (2.1%) are lower than last year (5.8%).
Linamar Corp is a diversified world-wide manufacturing company of highly engineered products. The company's Industrial segment operates the Skyjack and MacDon brands. It manufactures products for the Aerial Work Platform and Agricultural industries, respectively. Its web site is here Linamar Corporation.
The last stock I wrote about was about was BRP Inc (TSX-DOO, OTC-DOOO) ... learn more. The next stock I will write about will be Teck Resources Ltd (TSX-TECK.B, NYSE-TECK) ... learn more on Monday, October around 5 pm.
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