I used your Interactive Chart feature to compare the % share price increase over time of Martinrea and Magna - for 10 to 20 years Magna is the clear winner , but Martinrea is far better over the last 3 years . Do you think this better performance will continue over the next 2-3 years , or is a switch to Magna appropriate ?
MRE is smaller in size and trading at around 5.7x times' Forward P/E. In the 2Q, MRE’s revenue grew 22% to $1.36B, beating estimates of $1.25B and EPS was $0.62 beating estimates of $0.58. The balance sheet is okay with net debt of $1.2B, and net debt/EBITDA is around 2.1x. Usually, the smaller companies will experience a more significant upside in the recovery than more established, well-run operators due to a much larger jump in profit margin, and starting out at a lower multiple (typically). However, going forward, we would still side with MG. We think its larger size and global diversity allow MG to have a low-cost structure due to scale. In addition, we think MG has the most shareholder-friendly management team in the industry: The company has consistently raised dividends and repurchased shares over the years compared to LNR or MRE.