Linamar Corp is an attractive growth stock
16.03.2016 • About Linamar Corp (
$LNR) • By InTwits
Have you thought about Linamar Corp as a growth stock? It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Linamar Corp showed fast growth in the last financial year. The company's revenue surged on 23.8% in FY2015. The growth also happened in EBITDA of 26.2% for the same period.
In the longer period Linamar Corp showed fast revenue growth of 17.0% from 2012 to 2015 annually. EBITDA surged on 28.6% from 2012 to 2015 annually.
Linamar Corp ($LNR) financials for the last 5 years
| mln. CAD | 2011 | 2012 | 2013 | 2014 | 2015 |
|---|
| Revenue | 2,861 | 3,222 | 3,595 | 4,172 | 5,162 |
|---|
| Revenue growth, % | | 12.6% | 11.6% | 16.0% | 23.8% |
|---|
| Gross margin, % | 10.2% | 12.0% | 14.1% | 15.9% | 16.5% |
|---|
| SG&A, % | 5.01% | 5.14% | 5.10% | 5.24% | 5.15% |
|---|
| EBITDA | 335 | 409 | 539 | 690 | 871 |
|---|
| EBITDA growth, % | | 22.3% | 31.5% | 28.1% | 26.2% |
|---|
| EBITDA margin, % | 11.7% | 12.7% | 15.0% | 16.5% | 16.9% |
|---|
| Net Income | 101 | 146 | 230 | 321 | 437 |
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| Net Income margin, % | 3.54% | 4.53% | 6.39% | 7.68% | 8.46% |
|---|
| |
| CAPEX | 349 | 367 | 245 | 264 | 342 |
|---|
| CAPEX/Revenue, % | 12.2% | 11.4% | 6.81% | 6.32% | 6.62% |
|---|
| Debt | 656 | 719 | 544 | 437 | 548 |
|---|
| Cash | 99 | 82 | 130 | 194 | 339 |
|---|
| Net Debt/EBITDA | 1.7x | 1.6x | 0.8x | 0.4x | 0.2x |
|---|
| |
| ROIC, % | 10.9% | 12.9% | 17.0% | 21.7% | 23.7% |
|---|
| ROE, % | 11.5% | 14.9% | 19.1% | 21.2% | 22.2% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. Linamar Corp's EBITDA margin increased slightly on 0.400 pp from 16.5% to 16.9% in 2015. In the longer period Linamar Corp's EBITDA margin surged on 4.20 pp from 12.7% in 2012 to 16.9% in 2015.
Linamar Corp shows attractive ROIC at 23.7% for the last 12 months which assumes stable development model. Three years ago it was considerably lower at 12.9%. Average ROIC for the last three years was 20.8%.
Linamar Corp showed fast Net Income margin growth of 0.800 pp from 7.70% to 8.50% in 2015. In the longer period Net Income margin surged on 4 pp from 4.50% in 2012 to 8.50% in 2015.
Linamar Corp operates at ROE of 22.2%. It's average level of ROE for the last three years was 20.9%.
Capital expenditures (CAPEX)
To this fast growth Linamar Corp had to invest in CAPEX.In FY2015 the company had CAPEX/Revenue of 6.62%. CAPEX/Revenue dropped on 4.77 pp from 11.4% in 2012 to 6.62% in 2015. For the last three years the average CAPEX/Revenue was 6.58%.
Leverage (Debt)
Having such a fast growth profile Linamar Corp keeps low debt level at 0.2x Net Debt/EBITDA. In the longer period the company showed big decline in leverage of 1.32x from 1.56x in 2012 to 0.24x in 2015.
Valuation vs. comparable companies
The company trades at 5.0x EV/EBITDA which is 82.3% lower than 28.3x Consumer, Cyclical industry avearge calculated based on 111 companies. The company trades at 9.5x P/E which is 50.6% lower than 19.2x Consumer, Cyclical industry avearge calculated based on 26 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. At the end of trading day today Linamar Corp traded at 8.2x EV/(EBITDA-CAPEX) which is 147% higher than 3.3x Consumer, Cyclical peer group avearge calculated on the basis of 26 companies.
Management team
Linda S Hasenfratz is a CEO of Linamar Corp and Dale Schneider is a CFO. Linda S Hasenfratz is a longstanding CEO having spent 13.4 years with the company. Dale Schneider's tenure is 4.2 years as a CFO.
Peers in Consumer, Cyclical
Below you can find Linamar Corp benchmarking vs. other companies in Consumer, Cyclical industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Amaya Inc ($AYA) | 216.4% | 311.5% | 85.2% | 254.0% | |
| Partner Jet Corp ($PJT) | -19.9% | -15.2% | 1.2% | 119.7% | |
| Kelso Technologies Inc ($KLS) | 80.5% | 577.5% | 487.8% | 81.4% | |
| XPEL Technologies Corp ($DAP.U) | 46.3% | 76.6% | 67.7% | 65.5% | |
| Holloway Lodging Corp ($HLC) | | -24.6% | 2.7% | 62.7% | 13.5% |
| |
|---|
| Median (68 companies) | 16.1% | 5.3% | 4.9% | 7.0% | 4.0% |
|---|
| Linamar Corp ($LNR) | | 12.6% | 11.6% | 16.0% | 23.8% |
Top companies by Gross margin, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Restaurant Brands International Inc ($QSR) | | | 69.7% | 87.0% | 42.9% |
| Imvescor Restaurant Group Inc ($IRG) | 96.2% | 94.2% | 89.7% | 84.9% | 84.3% |
| DEQ Systems Corp ($DEQ) | 74.3% | 77.5% | 78.4% | 84.7% | |
| Cara Operations Ltd ($CAO) | | | 79.2% | 78.9% | 78.4% |
| Second Cup Ltd/The ($SCU) | 91.1% | 86.6% | 85.1% | 72.7% | 81.1% |
| |
|---|
| Median (60 companies) | 37.9% | 36.5% | 34.1% | 35.4% | 36.8% |
|---|
| Linamar Corp ($LNR) | 10.2% | 12.0% | 14.1% | 15.9% | 16.5% |
Top companies by EBITDA margin, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Westshore Terminals Investment Corp ($WTE) | | 49.7% | 65.9% | 60.9% | 59.6% |
| Gamehost Inc ($GH) | 44.2% | 46.1% | 45.7% | 45.9% | 42.8% |
| Great Canadian Gaming Corp ($GC) | 34.1% | 16.8% | 41.1% | 40.1% | 36.6% |
| Amaya Inc ($AYA) | -5.7% | 7.2% | 38.2% | 39.3% | |
| MTY Food Group Inc ($MTY) | 32.2% | 36.3% | 38.7% | 37.0% | 34.9% |
| |
|---|
| Median (66 companies) | 8.4% | 7.9% | 9.6% | 9.8% | 10.1% |
|---|
| Linamar Corp ($LNR) | 11.7% | 12.7% | 15.0% | 16.5% | 16.9% |
Top companies by CAPEX/Revenue, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Poydras Gaming Finance Corp ($PYD) | | | | 32.5% | |
| WestJet Airlines Ltd ($WJA) | 3.9% | 7.9% | 19.5% | 18.6% | 22.5% |
| Exchange Income Corp ($EIF) | 8.2% | 7.9% | 15.8% | 15.5% | 15.4% |
| Holloway Lodging Corp ($HLC) | 3.4% | 8.2% | 6.7% | 14.8% | 26.7% |
| Kelso Technologies Inc ($KLS) | 79.2% | 0.4% | 0.7% | 13.5% | |
| |
|---|
| Median (69 companies) | 2.6% | 2.7% | 2.8% | 2.3% | 3.1% |
|---|
| Linamar Corp ($LNR) | 12.2% | 11.4% | 6.8% | 6.3% | 6.6% |
Top companies by ROIC, %
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Partner Jet Corp ($PJT) | -30.7% | -51.6% | -50.8% | 85.1% | |
| Kelso Technologies Inc ($KLS) | -121.3% | | | 48.8% | |
| XPEL Technologies Corp ($DAP.U) | 52.9% | 54.7% | 57.5% | 43.2% | |
| Westshore Terminals Investment Corp ($WTE) | | 24.0% | 37.8% | 35.0% | 38.3% |
| Iplayco Corp Ltd ($IPC) | -35.4% | 23.0% | 58.5% | 33.6% | 10.9% |
| |
|---|
| Median (69 companies) | 10.4% | 9.7% | 10.1% | 9.7% | 11.0% |
|---|
| Linamar Corp ($LNR) | 10.9% | 12.9% | 17.0% | 21.7% | 23.7% |
Top companies by Net Debt / EBITDA
| FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Top 5 |
|---|
| Mountain China Resorts Holding Ltd ($MCG) | | | | 317.1x | |
| Restaurant Brands International Inc ($QSR) | | | 3.8x | 33.6x | 5.8x |
| Allied Hotel Properties Inc ($AHP) | | | | 21.3x | |
| Hudson's Bay Co ($HBC) | 8.7x | 3.8x | 3.6x | 19.1x | 3.6x |
| Amaya Inc ($AYA) | | 17.9x | 1.8x | 13.5x | |
| |
|---|
| Median (58 companies) | 1.3x | 1.2x | 1.8x | 2.1x | 1.4x |
|---|
| Linamar Corp ($LNR) | 1.7x | 1.6x | 0.8x | 0.4x | 0.2x |
