Q: Linamar recently reported. Please provide your assessment of their results? What is your outlook for the company going forward? Would you buy, hold or sell in today's level? Thank you
5i Research Answer:
EPS of $2.21 beat estimates of $2.07; revenue of $2.43B was ~2% above estimates. While it was a beat on top and bottom, comments on lower margins in the mobility segment worried investors. A couple of brokers lowered target prices. Sales rose 16%, income rose 15.7%. The margin pressure largely stems from new business launches, so is not necessarily a bad thing as it sets up future growth. The backlog of orders remains high. The stock is very cheap and the sector should do well as rates peak. We would see it as an accumulation buy. We think the outlook is fine, but buyers can display some patience here.