Diversification Gives Linamar an Edge

Article Excerpt

LINAMAR CORP. $14.80 (Toronto symbol LNR; SI Rating: Speculative) (519-836-7550; www.linamar.ca; Shares outstanding: 69.8 million; Market cap: $1.0 billion) makes precision- machined components, assemblies and systems for the North American and European car and light to heavy truck markets. The company focuses on the highly engineered systems of vehicles such as engines, transmissions, brakes, steering and suspensions. The company also produces agricultural implements in Hungary for worldwide sale. Linamar reported slightly lower sales in the three months ended September 30, 2006, to $528.1 million from $529.7 million a year earlier. Lower production from North American car makers, and the impact of a strengthened Canadian dollar, were partly offset by increased heavy truck sales. Earnings per share fell 34.4%, to $0.21 from $0.32. However, cash flow per share fell just 5%, to $0.76 from $0.80. Linamar’s long-term debt of $173.7 million is a reasonable 22% of equity. The company’s shares yield 1.6%. Sales at the company’s Skyjack division grew 17% in the latest quarter,…

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