Intrinsic value of Linamar Corporation - LNR

Previous Close

$70.61

  Intrinsic Value

$119.02

stock screener

  Rating & Target

str. buy

+69%

  Value-price divergence*

-13%

Previous close

$70.61

 
Intrinsic value

$119.02

 
Up/down potential

+69%

 
Rating

str. buy

 
Value-price divergence*

-13%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of LNR stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 4.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  16.35
  9.10
  8.69
  8.32
  7.99
  7.69
  7.42
  7.18
  6.96
  6.76
  6.59
  6.43
  6.29
  6.16
  6.04
  5.94
  5.84
  5.76
  5.68
  5.62
  5.55
  5.50
  5.45
  5.40
  5.36
  5.33
  5.29
  5.26
  5.24
  5.21
  5.19
Revenue, $m
  6,006
  6,553
  7,122
  7,715
  8,331
  8,972
  9,637
  10,329
  11,048
  11,796
  12,573
  13,381
  14,222
  15,098
  16,010
  16,961
  17,952
  18,986
  20,065
  21,192
  22,369
  23,599
  24,885
  26,230
  27,636
  29,109
  30,650
  32,263
  33,954
  35,724
  37,579
Variable operating expenses, $m
 
  5,769
  6,266
  6,784
  7,322
  7,881
  8,463
  9,067
  9,695
  10,348
  11,027
  11,687
  12,422
  13,187
  13,983
  14,814
  15,679
  16,582
  17,525
  18,509
  19,537
  20,611
  21,734
  22,909
  24,137
  25,423
  26,769
  28,179
  29,655
  31,201
  32,821
Fixed operating expenses, $m
 
  15
  16
  16
  17
  17
  17
  18
  18
  19
  19
  20
  20
  21
  21
  22
  22
  23
  23
  24
  25
  25
  26
  26
  27
  28
  29
  29
  30
  31
  31
Total operating expenses, $m
  5,309
  5,784
  6,282
  6,800
  7,339
  7,898
  8,480
  9,085
  9,713
  10,367
  11,046
  11,707
  12,442
  13,208
  14,004
  14,836
  15,701
  16,605
  17,548
  18,533
  19,562
  20,636
  21,760
  22,935
  24,164
  25,451
  26,798
  28,208
  29,685
  31,232
  32,852
Operating income, $m
  697
  769
  840
  915
  993
  1,073
  1,157
  1,244
  1,335
  1,429
  1,527
  1,674
  1,781
  1,891
  2,006
  2,126
  2,251
  2,381
  2,517
  2,659
  2,808
  2,963
  3,125
  3,294
  3,472
  3,658
  3,852
  4,056
  4,269
  4,492
  4,726
EBITDA, $m
  1,030
  1,136
  1,236
  1,340
  1,448
  1,560
  1,676
  1,797
  1,923
  2,054
  2,190
  2,332
  2,479
  2,633
  2,792
  2,959
  3,133
  3,314
  3,503
  3,700
  3,907
  4,122
  4,347
  4,583
  4,830
  5,088
  5,358
  5,641
  5,937
  6,247
  6,573
Interest expense (income), $m
  37
  45
  54
  62
  71
  80
  90
  100
  110
  121
  132
  144
  156
  168
  181
  195
  209
  224
  240
  256
  273
  290
  309
  328
  348
  369
  391
  414
  438
  464
  490
Earnings before tax, $m
  673
  723
  787
  853
  922
  993
  1,067
  1,145
  1,225
  1,308
  1,395
  1,531
  1,625
  1,723
  1,824
  1,931
  2,041
  2,157
  2,277
  2,403
  2,535
  2,672
  2,816
  2,967
  3,124
  3,289
  3,461
  3,641
  3,831
  4,029
  4,236
Tax expense, $m
  150
  195
  212
  230
  249
  268
  288
  309
  331
  353
  377
  413
  439
  465
  493
  521
  551
  582
  615
  649
  684
  722
  760
  801
  843
  888
  934
  983
  1,034
  1,088
  1,144
Net income, $m
  522
  528
  574
  623
  673
  725
  779
  836
  894
  955
  1,018
  1,118
  1,186
  1,257
  1,332
  1,409
  1,490
  1,575
  1,663
  1,754
  1,851
  1,951
  2,056
  2,166
  2,280
  2,401
  2,526
  2,658
  2,796
  2,941
  3,093

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  405
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  5,227
  5,259
  5,716
  6,191
  6,686
  7,200
  7,735
  8,290
  8,867
  9,467
  10,090
  10,739
  11,414
  12,117
  12,849
  13,612
  14,408
  15,238
  16,104
  17,008
  17,953
  18,940
  19,972
  21,051
  22,180
  23,362
  24,599
  25,894
  27,250
  28,671
  30,160
Adjusted assets (=assets-cash), $m
  4,822
  5,259
  5,716
  6,191
  6,686
  7,200
  7,735
  8,290
  8,867
  9,467
  10,090
  10,739
  11,414
  12,117
  12,849
  13,612
  14,408
  15,238
  16,104
  17,008
  17,953
  18,940
  19,972
  21,051
  22,180
  23,362
  24,599
  25,894
  27,250
  28,671
  30,160
Revenue / Adjusted assets
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
  1.246
Average production assets, $m
  2,039
  2,221
  2,414
  2,615
  2,824
  3,041
  3,267
  3,502
  3,745
  3,999
  4,262
  4,536
  4,821
  5,118
  5,428
  5,750
  6,086
  6,436
  6,802
  7,184
  7,583
  8,000
  8,436
  8,892
  9,369
  9,868
  10,390
  10,937
  11,510
  12,110
  12,739
Working capital, $m
  877
  740
  805
  872
  941
  1,014
  1,089
  1,167
  1,248
  1,333
  1,421
  1,512
  1,607
  1,706
  1,809
  1,917
  2,029
  2,145
  2,267
  2,395
  2,528
  2,667
  2,812
  2,964
  3,123
  3,289
  3,463
  3,646
  3,837
  4,037
  4,246
Total debt, $m
  1,433
  1,446
  1,677
  1,917
  2,166
  2,425
  2,694
  2,974
  3,265
  3,567
  3,882
  4,209
  4,549
  4,903
  5,272
  5,657
  6,058
  6,476
  6,912
  7,368
  7,844
  8,342
  8,862
  9,406
  9,975
  10,570
  11,194
  11,846
  12,530
  13,246
  13,997
Total liabilities, $m
  2,637
  2,650
  2,881
  3,121
  3,370
  3,629
  3,898
  4,178
  4,469
  4,771
  5,086
  5,413
  5,753
  6,107
  6,476
  6,861
  7,262
  7,680
  8,116
  8,572
  9,048
  9,546
  10,066
  10,610
  11,179
  11,774
  12,398
  13,050
  13,734
  14,450
  15,201
Total equity, $m
  2,590
  2,608
  2,835
  3,071
  3,316
  3,571
  3,836
  4,112
  4,398
  4,696
  5,005
  5,327
  5,662
  6,010
  6,373
  6,752
  7,146
  7,558
  7,988
  8,436
  8,905
  9,394
  9,906
  10,441
  11,001
  11,587
  12,201
  12,843
  13,516
  14,221
  14,959
Total liabilities and equity, $m
  5,227
  5,258
  5,716
  6,192
  6,686
  7,200
  7,734
  8,290
  8,867
  9,467
  10,091
  10,740
  11,415
  12,117
  12,849
  13,613
  14,408
  15,238
  16,104
  17,008
  17,953
  18,940
  19,972
  21,051
  22,180
  23,361
  24,599
  25,893
  27,250
  28,671
  30,160
Debt-to-equity ratio
  0.553
  0.550
  0.590
  0.620
  0.650
  0.680
  0.700
  0.720
  0.740
  0.760
  0.780
  0.790
  0.800
  0.820
  0.830
  0.840
  0.850
  0.860
  0.870
  0.870
  0.880
  0.890
  0.890
  0.900
  0.910
  0.910
  0.920
  0.920
  0.930
  0.930
  0.940
Adjusted equity ratio
  0.455
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496
  0.496

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  522
  528
  574
  623
  673
  725
  779
  836
  894
  955
  1,018
  1,118
  1,186
  1,257
  1,332
  1,409
  1,490
  1,575
  1,663
  1,754
  1,851
  1,951
  2,056
  2,166
  2,280
  2,401
  2,526
  2,658
  2,796
  2,941
  3,093
Depreciation, amort., depletion, $m
  333
  368
  396
  425
  455
  486
  519
  553
  589
  625
  663
  657
  699
  742
  787
  833
  882
  933
  986
  1,041
  1,099
  1,159
  1,223
  1,289
  1,358
  1,430
  1,506
  1,585
  1,668
  1,755
  1,846
Funds from operations, $m
  891
  895
  970
  1,047
  1,128
  1,211
  1,298
  1,389
  1,483
  1,580
  1,682
  1,775
  1,885
  1,999
  2,118
  2,243
  2,372
  2,507
  2,648
  2,796
  2,950
  3,110
  3,278
  3,454
  3,638
  3,831
  4,032
  4,243
  4,464
  4,696
  4,939
Change in working capital, $m
  -7
  62
  64
  67
  70
  72
  75
  78
  81
  84
  88
  91
  95
  99
  103
  107
  112
  117
  122
  127
  133
  139
  145
  152
  159
  166
  174
  182
  191
  200
  210
Cash from operations, $m
  898
  834
  906
  980
  1,058
  1,139
  1,223
  1,311
  1,401
  1,496
  1,594
  1,684
  1,790
  1,900
  2,015
  2,135
  2,260
  2,390
  2,526
  2,668
  2,817
  2,971
  3,133
  3,302
  3,479
  3,664
  3,858
  4,061
  4,273
  4,496
  4,729
Maintenance CAPEX, $m
  0
  -296
  -322
  -350
  -379
  -409
  -441
  -473
  -507
  -543
  -580
  -618
  -657
  -699
  -742
  -787
  -833
  -882
  -933
  -986
  -1,041
  -1,099
  -1,159
  -1,223
  -1,289
  -1,358
  -1,430
  -1,506
  -1,585
  -1,668
  -1,755
New CAPEX, $m
  -343
  -182
  -193
  -201
  -209
  -217
  -226
  -235
  -244
  -253
  -263
  -274
  -285
  -297
  -309
  -322
  -336
  -351
  -366
  -382
  -399
  -417
  -436
  -456
  -477
  -499
  -522
  -547
  -573
  -600
  -629
Cash from investing activities, $m
  -1,575
  -478
  -515
  -551
  -588
  -626
  -667
  -708
  -751
  -796
  -843
  -892
  -942
  -996
  -1,051
  -1,109
  -1,169
  -1,233
  -1,299
  -1,368
  -1,440
  -1,516
  -1,595
  -1,679
  -1,766
  -1,857
  -1,952
  -2,053
  -2,158
  -2,268
  -2,384
Free cash flow, $m
  -677
  356
  391
  430
  470
  513
  557
  602
  650
  700
  751
  792
  847
  905
  964
  1,026
  1,091
  1,158
  1,228
  1,301
  1,376
  1,455
  1,538
  1,624
  1,714
  1,808
  1,906
  2,008
  2,115
  2,228
  2,345
Issuance/(repayment) of debt, $m
  836
  218
  230
  240
  249
  259
  269
  280
  291
  302
  314
  327
  340
  354
  369
  385
  401
  418
  437
  456
  476
  498
  520
  544
  569
  595
  623
  653
  684
  716
  750
Issuance/(repurchase) of shares, $m
  1
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  816
  218
  230
  240
  249
  259
  269
  280
  291
  302
  314
  327
  340
  354
  369
  385
  401
  418
  437
  456
  476
  498
  520
  544
  569
  595
  623
  653
  684
  716
  750
Total cash flow (excl. dividends), $m
  92
  574
  621
  669
  719
  772
  826
  882
  941
  1,002
  1,065
  1,119
  1,187
  1,259
  1,333
  1,411
  1,492
  1,576
  1,664
  1,756
  1,852
  1,953
  2,058
  2,168
  2,283
  2,403
  2,529
  2,661
  2,799
  2,944
  3,096
Retained Cash Flow (-), $m
  -331
  -218
  -227
  -236
  -245
  -255
  -265
  -275
  -286
  -298
  -309
  -322
  -335
  -349
  -363
  -378
  -395
  -412
  -430
  -449
  -469
  -490
  -512
  -535
  -560
  -586
  -613
  -642
  -673
  -705
  -739
Prev. year cash balance distribution, $m
 
  200
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  556
  394
  433
  474
  517
  561
  607
  655
  704
  756
  797
  853
  910
  970
  1,032
  1,097
  1,165
  1,235
  1,308
  1,384
  1,463
  1,546
  1,632
  1,723
  1,817
  1,916
  2,019
  2,126
  2,239
  2,357
Discount rate, %
 
  4.30
  4.52
  4.74
  4.98
  5.23
  5.49
  5.76
  6.05
  6.35
  6.67
  7.00
  7.35
  7.72
  8.11
  8.51
  8.94
  9.39
  9.86
  10.35
  10.87
  11.41
  11.98
  12.58
  13.21
  13.87
  14.56
  15.29
  16.05
  16.86
  17.70
PV of cash for distribution, $m
 
  533
  361
  377
  390
  400
  407
  410
  409
  405
  396
  379
  364
  346
  326
  303
  279
  253
  227
  201
  176
  151
  128
  107
  88
  71
  56
  43
  33
  24
  18
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Linamar Corporation manufactures and sells precision metallic components and aerial work platforms in Canada, North and South America, the European Union, and the Asia Pacific. It operates through two segments, Powertrain/Driveline and Industrial. The company offers hybrid power units, power transfer units, rear drive units/modules, and engineered gears; and shaft and shell assemblies, differential assemblies, transmission gears, clutch modules, center housings, transmission/driveline shafts, transfer case pump housings, and other transmission components. It also provides cylinder blocks, cylinder heads, connecting rods, camshafts, flywheels, fuel rails, pumps and bodies, balance shaft modules, fuel injector bodies, fuel pump housings, and turbo charger housings; and wheel hubs and bearings, axle shafts, and steering knuckles. In addition, the company offers precision machined castings and metallic assemblies; and planetary carriers, gearbox housing, bearing housings, and torque arms. Further, it provides telehandler equipment, telescopic boom lifts, articulating boom lifts, and telescopic material handlers; markets corn and sunflower heads under the Harvestec and OROS brands; and produces assemblies for hay rake equipment, track modules for tracked construction equipment and tractors, combine head trailers, and other agricultural related fabrications and systems. Additionally, the company offers carriers and housings, oil/water pumps, flywheel covers, crankshaft gears, vertical mast lifts, DC electrical scissor lifts, rough terrain scissor lifts, hollow shafts, and down hole drill heads; and provides transportation and logistics services. It serves automotive, commercial vehicle, off highway, marine and recreational, industrial, aerial work platforms, energy, and agricultural industries. The company was founded in 1966 and is headquartered in Guelph, Canada.

FINANCIAL RATIOS  of  Linamar Corporation (LNR)

Valuation Ratios
P/E Ratio 8.8
Price to Sales 0.8
Price to Book 1.8
Price to Tangible Book
Price to Cash Flow 5.1
Price to Free Cash Flow 8.3
Growth Rates
Sales Growth Rate 16.4%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 0.3%
Cap. Spend. - 3 Yr. Gr. Rate 7%
Financial Strength
Quick Ratio 2
Current Ratio 0
LT Debt to Equity 47.4%
Total Debt to Equity 55.3%
Interest Coverage 19
Management Effectiveness
Return On Assets 12.2%
Ret/ On Assets - 3 Yr. Avg. 12.6%
Return On Total Capital 15.3%
Ret/ On T. Cap. - 3 Yr. Avg. 16.4%
Return On Equity 21.5%
Return On Equity - 3 Yr. Avg. 21.7%
Asset Turnover 1.3
Profitability Ratios
Gross Margin 16.7%
Gross Margin - 3 Yr. Avg. 16.4%
EBITDA Margin 17.4%
EBITDA Margin - 3 Yr. Avg. 17%
Operating Margin 11.6%
Oper. Margin - 3 Yr. Avg. 11.3%
Pre-Tax Margin 11.2%
Pre-Tax Margin - 3 Yr. Avg. 10.9%
Net Profit Margin 8.7%
Net Profit Margin - 3 Yr. Avg. 8.3%
Effective Tax Rate 22.3%
Eff/ Tax Rate - 3 Yr. Avg. 23.9%
Payout Ratio 5%

LNR stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the LNR stock intrinsic value calculation we used $6006 million for the last fiscal year's total revenue generated by Linamar Corporation. The default revenue input number comes from 2016 income statement of Linamar Corporation. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our LNR stock valuation model: a) initial revenue growth rate of 9.1% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 4.3%, whose default value for LNR is calculated based on our internal credit rating of Linamar Corporation, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Linamar Corporation.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of LNR stock the variable cost ratio is equal to 88.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $15 million in the base year in the intrinsic value calculation for LNR stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.7% for Linamar Corporation.

Corporate tax rate of 27% is the nominal tax rate for Linamar Corporation. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the LNR stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for LNR are equal to 33.9%.

Life of production assets of 6.9 years is the average useful life of capital assets used in Linamar Corporation operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for LNR is equal to 11.3%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $2590 million for Linamar Corporation - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 64.693 million for Linamar Corporation is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Linamar Corporation at the current share price and the inputted number of shares is $4.6 billion.

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Stock chart of LNR Financial statements of LNR
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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