Eye on Linamar Corp with its long history of healthy growth
15.03.2017 • About Linamar Corp (
$LNR) • By InTwits
Linamar Corp is a fast-growing stock in Consumer, Cyclical industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Linamar Corp showed fast growth in the last financial year. The company's revenue surged on 16.3% in FY2016. In addition to revenue Linamar Corp also keeps delivering EBITDA growth. It was 18.3% in FY2016
In the last 3 years Linamar Corp showed fast revenue growth of 18.6% from 2013 to 2016 annually. EBITDA surged on 24.1% from 2013 to 2016 annually.
Linamar Corp ($LNR) financials for the last 5 years
| mln. CAD | 2012 | 2013 | 2014 | 2015 | 2016 |
|---|
| Revenue | 3,222 | 3,595 | 4,172 | 5,162 | 6,006 |
|---|
| Revenue growth, % | | 11.6% | 16.0% | 23.8% | 16.3% |
|---|
| Gross margin, % | 12.0% | 14.1% | 15.9% | 16.5% | 16.7% |
|---|
| SG&A, % | 5.14% | 5.10% | 5.24% | 5.15% | 5.42% |
|---|
| EBITDA | 409 | 539 | 690 | 871 | 1,030 |
|---|
| EBITDA growth, % | | 31.5% | 28.1% | 26.2% | 18.3% |
|---|
| EBITDA margin, % | 12.7% | 15.0% | 16.5% | 16.9% | 17.2% |
|---|
| Net Income | 146 | 230 | 321 | 437 | 522 |
|---|
| Net Income margin, % | 4.53% | 6.39% | 7.68% | 8.46% | 8.69% |
|---|
| |
| CAPEX | 367 | 245 | 264 | 342 | 343 |
|---|
| CAPEX/Revenue, % | 11.4% | 6.81% | 6.32% | 6.62% | 5.72% |
|---|
| Debt | 719 | 544 | 437 | 548 | 1,433 |
|---|
| Cash | 82 | 130 | 194 | 339 | 405 |
|---|
| Net Debt/EBITDA | 1.6x | 0.8x | 0.4x | 0.2x | 1.0x |
|---|
| |
| ROIC, % | 12.9% | 17.0% | 21.7% | 23.7% | 19.8% |
|---|
| ROE, % | 14.9% | 19.1% | 21.2% | 22.2% | 21.5% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. The company showed small growth in EBITDA margin of 0.300 pp from 16.9% to 17.2% in 2016. In the longer period EBITDA margin surged on 2.20 pp from 15% in 2013 to 17.2% in 2016.
Linamar Corp shows attractive ROIC at 19.8% for the last 12 months which assumes stable development model. Three years ago it was a bit lower at 17.0%. For the last three years the average ROIC was 21.7%.
Linamar Corp's Net Income margin increased slightly on 0.200 pp from 8.50% to 8.70% in 2016. In the longer period Linamar Corp showed fast Net Income margin growth of 2.30 pp from 6.40% in 2013 to 8.70% in 2016.
Linamar Corp operates at ROE of 21.5%. It's average ROE for the last three years was 21.7%.
Capital expenditures (CAPEX)
To this fast growth Linamar Corp had to invest in CAPEX.Linamar Corp's CAPEX/Revenue was 5.72% in FY2016. The company's CAPEX/Revenue dropped on 1.09 pp from 6.81% in 2013 to 5.72% in 2016. For the last three years the average CAPEX/Revenue was 6.22%.
Leverage (Debt)
Linamar Corp has low debt level at 1.0x Net Debt/EBITDA - at the same time with high growth. In the last 3 years Linamar Corp's leverage surged on 0.23x from 0.77x in 2013 to 1.00x in 2016.
Valuation vs. comparable companies
At the end of trading day today Linamar Corp traded at 4.9x EV/EBITDA which is 77.7% lower than 22.1x Consumer, Cyclical peer group avearge calculated on the basis of 111 companies. The market closed today at 7.8x P/E for Linamar Corp which is 81.1% lower than 41.1x Consumer, Cyclical peer group avearge calculated on the basis of 25 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 7.4x EV/(EBITDA-CAPEX) which is 457% higher than 1.3x Consumer, Cyclical peer group avearge calculated on the basis of 14 companies.
Management team
Linda S Hasenfratz is a CEO of Linamar Corp and Dale Schneider is a CFO.
Peers in Consumer, Cyclical
Below we provide Linamar Corp benchmarking against other companies in Consumer, Cyclical industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Poydras Gaming Finance Corp ($PYD) | | | | 539.9% | |
| Restaurant Brands International Inc ($QSR) | | | 4.6% | 238.0% | 2.3% |
| DHX Media Ltd ($DHX.A) | | 33.9% | 19.4% | 127.4% | 15.4% |
| Amaya Inc ($AYA) | 311.5% | 85.2% | 254.0% | 113.8% | |
| NYX Gaming Group Ltd ($NYX) | 65.2% | 52.8% | 45.8% | 91.8% | |
| |
|---|
| Median (71 companies) | 5.9% | 4.9% | 7.0% | 6.1% | 5.8% |
|---|
| Linamar Corp ($LNR) | | 11.6% | 16.0% | 23.8% | 16.3% |
Top companies by Gross margin, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| NYX Gaming Group Ltd ($NYX) | 91.3% | 86.7% | 88.3% | 85.6% | |
| Imvescor Restaurant Group Inc ($IRG) | 94.2% | 89.7% | 84.9% | 84.3% | 79.9% |
| DEQ Systems Corp ($DEQ) | 77.5% | 78.4% | 84.7% | 82.7% | |
| Second Cup Ltd/The ($SCU) | 86.6% | 85.1% | 72.7% | 81.1% | |
| New Look Vision Group Inc ($BCI) | 71.8% | 72.6% | 72.6% | 78.7% | |
| |
|---|
| Median (61 companies) | 37.5% | 36.5% | 36.6% | 33.7% | 36.2% |
|---|
| Linamar Corp ($LNR) | 12.0% | 14.1% | 15.9% | 16.5% | 16.7% |
Top companies by EBITDA margin, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Westshore Terminals Investment Corp ($WTE) | 49.7% | 65.9% | 60.9% | 59.6% | |
| Gamehost Inc ($GH) | 46.1% | 45.7% | 45.9% | 42.8% | |
| Great Canadian Gaming Corp ($GC) | 16.8% | 41.1% | 40.1% | 36.6% | 34.4% |
| Imvescor Restaurant Group Inc ($IRG) | 27.9% | 27.3% | 25.5% | 35.9% | 31.7% |
| Whistler Blackcomb Holdings Inc ($WB) | 36.0% | 35.9% | 36.4% | 35.4% | |
| |
|---|
| Median (66 companies) | 7.9% | 9.8% | 10.1% | 9.0% | 10.6% |
|---|
| Linamar Corp ($LNR) | 12.7% | 15.0% | 16.5% | 16.9% | 17.2% |
Top companies by CAPEX/Revenue, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Holloway Lodging Corp ($HLC) | 8.2% | 6.7% | 14.8% | 26.7% | |
| WestJet Airlines Ltd ($WJA) | 7.9% | 19.5% | 18.6% | 22.5% | 22.4% |
| Westshore Terminals Investment Corp ($WTE) | 25.7% | 11.5% | 6.2% | 21.2% | |
| Exchange Income Corp ($EIF) | 7.9% | 15.8% | 15.5% | 15.4% | 29.7% |
| Chorus Aviation Inc ($CHR.A) | 9.9% | 9.6% | 3.9% | 15.0% | 34.2% |
| |
|---|
| Median (71 companies) | 2.6% | 2.7% | 2.3% | 2.6% | 3.3% |
|---|
| Linamar Corp ($LNR) | 11.4% | 6.8% | 6.3% | 6.6% | 5.7% |
Top companies by ROIC, %
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Partner Jet Corp ($PJT) | -51.6% | -50.8% | 85.1% | 51.1% | |
| Westshore Terminals Investment Corp ($WTE) | 24.0% | 37.8% | 35.0% | 38.3% | |
| BRP Inc/CA ($DOO) | 29.8% | 26.8% | 32.3% | 35.3% | 26.6% |
| Cara Operations Ltd ($CAO) | | | 24.7% | 35.1% | |
| Jean Coutu Group PJC Inc/The ($PJC.A) | 34.4% | 29.8% | 29.2% | 30.2% | 27.3% |
| |
|---|
| Median (71 companies) | 9.6% | 9.7% | 9.6% | 8.5% | 10.8% |
|---|
| Linamar Corp ($LNR) | 12.9% | 17.0% | 21.7% | 23.7% | 19.8% |
Top companies by Net Debt / EBITDA
| FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Top 5 |
|---|
| Poydras Gaming Finance Corp ($PYD) | | | | 39.7x | |
| Mountain China Resorts Holding Ltd ($MCG) | | | 317.1x | 29.0x | |
| Rainmaker Entertainment Inc ($RNK) | | | | 18.6x | |
| Holloway Lodging Corp ($HLC) | | 5.8x | 8.4x | 17.1x | |
| Discovery Air Inc ($DA.A) | 2.8x | 3.8x | 7.5x | 11.4x | 7.9x |
| |
|---|
| Median (56 companies) | 1.3x | 1.8x | 2.1x | 2.2x | 1.6x |
|---|
| Linamar Corp ($LNR) | 1.6x | 0.8x | 0.4x | 0.2x | 1.0x |
