As of May 29, 2025, Linamar Corp's estimated intrinsic value ranges from $58.42 to $121.21 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $69.98 | +11.8% |
| Discounted Cash Flow (5Y) | $77.25 | +23.4% |
| Dividend Discount Model (Multi-Stage) | $66.98 | +7.0% |
| Dividend Discount Model (Stable) | $58.42 | -6.7% |
| Earnings Power Value | $121.21 | +93.6% |
Is Linamar Corp (LNR.TO) undervalued or overvalued?
With the current market price at $62.61, the stock appears to be moderately undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Linamar Corp's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.86 | 1.02 |
| Cost of equity | 7.6% | 10.4% |
| Cost of debt | 5.0% | 5.0% |
| Tax rate | 25.3% | 26.7% |
| Debt/Equity ratio | 0.63 | 0.63 |
| After-tax WACC | 6.1% | 7.8% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $77 | $5,916M | 76.7% |
| 10-Year Growth | $70 | $5,481M | 58.2% |
| 5-Year EBITDA | $77 | $5,926M | 76.7% |
| 10-Year EBITDA | $86 | $6,451M | 64.4% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $584M |
| Discount Rate (WACC) | 7.8% - 6.1% |
| Enterprise Value | $7,500M - $9,599M |
| Net Debt | $1,289M |
| Equity Value | $6,211M - $8,309M |
| Outstanding Shares | 60M |
| Fair Value | $104 - $139 |
| Selected Fair Value | $121.21 |
| Metric | Value |
|---|---|
| Market Capitalization | $3750M |
| Enterprise Value | $5040M |
| Trailing P/E | 14.57 |
| Forward P/E | 10.82 |
| Trailing EV/EBITDA | 5.15 |
| Current Dividend Yield | 168.55% |
| Dividend Growth Rate (5Y) | 27.21% |
| Debt-to-Equity Ratio | 0.63 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $20.99 |
| Discounted Cash Flow (5Y) | 25% | $19.31 |
| Dividend Discount Model (Multi-Stage) | 20% | $13.40 |
| Dividend Discount Model (Stable) | 15% | $8.76 |
| Earnings Power Value | 10% | $12.12 |
| Weighted Average | 100% | $74.59 |
Based on our comprehensive valuation analysis, Linamar Corp's weighted average intrinsic value is $74.59, which is approximately 19.1% above the current market price of $62.61.
Key investment considerations:
Given these factors, we believe Linamar Corp is currently moderately undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.