Intrinsic value of Linamar Corporation - LNR

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$56.71

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$56.71

 
Intrinsic value

$129.07

 
Up/down potential

+128%

 
Rating

str. buy

 
Value-price divergence* premium content

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*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 3.7

 

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
  10.60
  10.04
  9.54
  9.08
  8.67
  8.31
  7.98
  7.68
  7.41
  7.17
  6.95
  6.76
  6.58
  6.42
  6.28
  6.15
  6.04
  5.93
  5.84
  5.76
  5.68
  5.61
  5.55
  5.50
  5.45
  5.40
  5.36
  5.33
  5.29
  5.26
Revenue, $m
  6,006
  6,643
  7,310
  8,007
  8,734
  9,491
  10,280
  11,100
  11,952
  12,838
  13,758
  14,715
  15,709
  16,743
  17,818
  18,938
  20,103
  21,317
  22,581
  23,900
  25,276
  26,712
  28,211
  29,777
  31,414
  33,125
  34,915
  36,787
  38,746
  40,797
  42,944
Variable operating expenses, $m
 
  5,847
  6,430
  7,039
  7,674
  8,335
  9,024
  9,740
  10,484
  11,258
  12,062
  12,852
  13,720
  14,623
  15,562
  16,540
  17,558
  18,618
  19,722
  20,874
  22,076
  23,330
  24,639
  26,007
  27,437
  28,931
  30,494
  32,129
  33,840
  35,631
  37,507
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
  5,862
  6,446
  7,055
  7,691
  8,352
  9,041
  9,758
  10,502
  11,277
  12,081
  12,872
  13,740
  14,644
  15,583
  16,562
  17,580
  18,641
  19,745
  20,898
  22,101
  23,355
  24,665
  26,033
  27,464
  28,959
  30,523
  32,158
  33,870
  35,662
  37,538
Operating income, $m
  697
  780
  864
  952
  1,044
  1,139
  1,238
  1,342
  1,449
  1,561
  1,677
  1,843
  1,969
  2,099
  2,235
  2,376
  2,523
  2,676
  2,836
  3,002
  3,176
  3,357
  3,546
  3,744
  3,950
  4,166
  4,392
  4,628
  4,876
  5,135
  5,406
EBITDA, $m
  1,030
  1,152
  1,269
  1,391
  1,518
  1,651
  1,789
  1,933
  2,082
  2,237
  2,399
  2,566
  2,741
  2,922
  3,110
  3,306
  3,511
  3,723
  3,945
  4,176
  4,417
  4,669
  4,932
  5,207
  5,494
  5,794
  6,107
  6,436
  6,779
  7,139
  7,515
Interest expense (income), $m
  37
  45
  55
  65
  75
  86
  98
  109
  122
  134
  148
  161
  176
  191
  206
  222
  239
  256
  274
  293
  313
  334
  355
  378
  401
  426
  451
  478
  506
  535
  566
Earnings before tax, $m
  673
  735
  809
  887
  968
  1,053
  1,141
  1,232
  1,328
  1,427
  1,529
  1,682
  1,793
  1,909
  2,029
  2,154
  2,284
  2,420
  2,561
  2,709
  2,862
  3,023
  3,191
  3,366
  3,549
  3,741
  3,941
  4,150
  4,370
  4,599
  4,840
Tax expense, $m
  150
  198
  218
  239
  261
  284
  308
  333
  358
  385
  413
  454
  484
  515
  548
  582
  617
  653
  692
  731
  773
  816
  862
  909
  958
  1,010
  1,064
  1,121
  1,180
  1,242
  1,307
Net income, $m
  522
  536
  591
  648
  707
  769
  833
  900
  969
  1,041
  1,116
  1,228
  1,309
  1,393
  1,481
  1,572
  1,667
  1,766
  1,870
  1,977
  2,090
  2,207
  2,329
  2,457
  2,591
  2,731
  2,877
  3,030
  3,190
  3,357
  3,533

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
  5,331
  5,866
  6,426
  7,009
  7,617
  8,250
  8,908
  9,592
  10,303
  11,042
  11,810
  12,608
  13,437
  14,300
  15,199
  16,134
  17,108
  18,123
  19,182
  20,286
  21,438
  22,641
  23,898
  25,212
  26,585
  28,021
  29,524
  31,096
  32,742
  34,466
Adjusted assets (=assets-cash), $m
  4,822
  5,331
  5,866
  6,426
  7,009
  7,617
  8,250
  8,908
  9,592
  10,303
  11,042
  11,810
  12,608
  13,437
  14,300
  15,199
  16,134
  17,108
  18,123
  19,182
  20,286
  21,438
  22,641
  23,898
  25,212
  26,585
  28,021
  29,524
  31,096
  32,742
  34,466
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
  2,252
  2,478
  2,714
  2,961
  3,218
  3,485
  3,763
  4,052
  4,352
  4,664
  4,988
  5,325
  5,676
  6,040
  6,420
  6,815
  7,226
  7,655
  8,102
  8,569
  9,055
  9,564
  10,095
  10,649
  11,229
  11,836
  12,471
  13,135
  13,830
  14,558
Working capital, $m
  877
  751
  826
  905
  987
  1,073
  1,162
  1,254
  1,351
  1,451
  1,555
  1,663
  1,775
  1,892
  2,013
  2,140
  2,272
  2,409
  2,552
  2,701
  2,856
  3,018
  3,188
  3,365
  3,550
  3,743
  3,945
  4,157
  4,378
  4,610
  4,853
Total debt, $m
  1,433
  1,483
  1,753
  2,035
  2,329
  2,635
  2,954
  3,286
  3,631
  3,989
  4,361
  4,748
  5,150
  5,568
  6,003
  6,456
  6,927
  7,418
  7,930
  8,464
  9,020
  9,601
  10,207
  10,841
  11,503
  12,195
  12,919
  13,676
  14,468
  15,298
  16,167
Total liabilities, $m
  2,637
  2,687
  2,957
  3,239
  3,533
  3,839
  4,158
  4,490
  4,835
  5,193
  5,565
  5,952
  6,354
  6,772
  7,207
  7,660
  8,131
  8,622
  9,134
  9,668
  10,224
  10,805
  11,411
  12,045
  12,707
  13,399
  14,123
  14,880
  15,672
  16,502
  17,371
Total equity, $m
  2,590
  2,644
  2,910
  3,187
  3,477
  3,778
  4,092
  4,419
  4,758
  5,110
  5,477
  5,858
  6,253
  6,665
  7,093
  7,539
  8,002
  8,486
  8,989
  9,514
  10,062
  10,633
  11,230
  11,854
  12,505
  13,186
  13,899
  14,644
  15,424
  16,240
  17,095
Total liabilities and equity, $m
  5,227
  5,331
  5,867
  6,426
  7,010
  7,617
  8,250
  8,909
  9,593
  10,303
  11,042
  11,810
  12,607
  13,437
  14,300
  15,199
  16,133
  17,108
  18,123
  19,182
  20,286
  21,438
  22,641
  23,899
  25,212
  26,585
  28,022
  29,524
  31,096
  32,742
  34,466
Debt-to-equity ratio
  0.553
  0.560
  0.600
  0.640
  0.670
  0.700
  0.720
  0.740
  0.760
  0.780
  0.800
  0.810
  0.820
  0.840
  0.850
  0.860
  0.870
  0.870
  0.880
  0.890
  0.900
  0.900
  0.910
  0.910
  0.920
  0.920
  0.930
  0.930
  0.940
  0.940
  0.950
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
  536
  591
  648
  707
  769
  833
  900
  969
  1,041
  1,116
  1,228
  1,309
  1,393
  1,481
  1,572
  1,667
  1,766
  1,870
  1,977
  2,090
  2,207
  2,329
  2,457
  2,591
  2,731
  2,877
  3,030
  3,190
  3,357
  3,533
Depreciation, amort., depletion, $m
  333
  372
  405
  439
  475
  512
  551
  591
  633
  676
  722
  723
  772
  823
  875
  930
  988
  1,047
  1,109
  1,174
  1,242
  1,312
  1,386
  1,463
  1,543
  1,627
  1,715
  1,807
  1,904
  2,004
  2,110
Funds from operations, $m
  891
  908
  995
  1,087
  1,182
  1,281
  1,384
  1,491
  1,602
  1,718
  1,838
  1,951
  2,081
  2,216
  2,356
  2,503
  2,655
  2,814
  2,979
  3,152
  3,331
  3,519
  3,715
  3,920
  4,134
  4,358
  4,592
  4,837
  5,093
  5,362
  5,643
Change in working capital, $m
  -7
  72
  75
  79
  82
  86
  89
  93
  96
  100
  104
  108
  112
  117
  122
  126
  132
  137
  143
  149
  155
  162
  169
  177
  185
  193
  202
  212
  221
  232
  243
Cash from operations, $m
  898
  1,129
  920
  1,008
  1,099
  1,195
  1,295
  1,398
  1,506
  1,618
  1,734
  1,843
  1,968
  2,099
  2,235
  2,376
  2,523
  2,677
  2,836
  3,002
  3,176
  3,357
  3,546
  3,743
  3,949
  4,165
  4,390
  4,626
  4,872
  5,130
  5,400
Maintenance CAPEX, $m
  0
  -296
  -326
  -359
  -393
  -429
  -466
  -505
  -545
  -587
  -631
  -676
  -723
  -772
  -823
  -875
  -930
  -988
  -1,047
  -1,109
  -1,174
  -1,242
  -1,312
  -1,386
  -1,463
  -1,543
  -1,627
  -1,715
  -1,807
  -1,904
  -2,004
New CAPEX, $m
  -343
  -213
  -226
  -236
  -247
  -257
  -267
  -278
  -289
  -300
  -312
  -324
  -337
  -350
  -365
  -379
  -395
  -411
  -429
  -447
  -466
  -487
  -508
  -531
  -555
  -580
  -607
  -635
  -664
  -695
  -728
Cash from investing activities, $m
  -1,575
  -509
  -552
  -595
  -640
  -686
  -733
  -783
  -834
  -887
  -943
  -1,000
  -1,060
  -1,122
  -1,188
  -1,254
  -1,325
  -1,399
  -1,476
  -1,556
  -1,640
  -1,729
  -1,820
  -1,917
  -2,018
  -2,123
  -2,234
  -2,350
  -2,471
  -2,599
  -2,732
Free cash flow, $m
  -677
  621
  368
  412
  460
  509
  561
  615
  672
  730
  791
  842
  908
  977
  1,048
  1,121
  1,198
  1,277
  1,360
  1,446
  1,535
  1,628
  1,725
  1,826
  1,931
  2,041
  2,156
  2,276
  2,401
  2,531
  2,668
Issuance/(repayment) of debt, $m
  836
  255
  270
  282
  294
  306
  319
  332
  345
  358
  372
  387
  402
  418
  435
  453
  471
  491
  512
  533
  557
  581
  606
  633
  662
  692
  724
  757
  792
  830
  869
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
  255
  270
  282
  294
  306
  319
  332
  345
  358
  372
  387
  402
  418
  435
  453
  471
  491
  512
  533
  557
  581
  606
  633
  662
  692
  724
  757
  792
  830
  869
Total cash flow (excl. dividends), $m
  92
  876
  637
  694
  754
  816
  880
  947
  1,016
  1,089
  1,164
  1,229
  1,311
  1,395
  1,483
  1,574
  1,669
  1,768
  1,872
  1,979
  2,092
  2,209
  2,332
  2,460
  2,593
  2,733
  2,880
  3,033
  3,193
  3,361
  3,536
Retained Cash Flow (-), $m
  -331
  -254
  -265
  -277
  -289
  -302
  -314
  -326
  -339
  -353
  -366
  -381
  -396
  -412
  -428
  -446
  -464
  -483
  -504
  -525
  -548
  -572
  -597
  -623
  -652
  -681
  -712
  -745
  -780
  -816
  -855
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
 
  822
  372
  417
  464
  514
  566
  620
  677
  736
  797
  849
  915
  983
  1,055
  1,129
  1,205
  1,285
  1,368
  1,454
  1,544
  1,638
  1,735
  1,836
  1,942
  2,052
  2,167
  2,288
  2,413
  2,544
  2,682
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
 
  788
  341
  363
  382
  398
  411
  419
  423
  423
  418
  403
  390
  374
  354
  331
  306
  280
  252
  224
  196
  169
  144
  120
  99
  80
  63
  49
  37
  28
  20
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 7.1
Price to Sales 0.6
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 4.1
Price to Free Cash Flow 6.7
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 10.6% 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 64.527 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 $3.7 billion.


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Stock chart of LNR Financial statements of LNR
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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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