From its beginnings as purely an auto provider, Linamar Corp. (TSX:LNR) has been an instance of Canadian excellence. Right now, Linamar is a diversified manufacturing firm that’s making use of this excellence because it continues to broaden and develop.

Double-digit progress for this auto inventory

Linamar has a protracted and profitable historical past that has translated into stable long-term efficiency for Linamar inventory.

Linamar’s enterprise is comprised of two segments. The primary, and most essential one, is its mobility enterprise. This enterprise is basically an auto elements enterprise, with a concentrate on extremely specialised parts and methods. It accounted for 76% of complete income in 2022. The opposite section is the Industrial section. This section manufactures gear for the development and agriculture industries. It accounts for the remaining 24% of Linamar’s income.

Enterprise tendencies in each of those companies are sturdy. Within the mobility enterprise, for instance, gross sales elevated 18.5% to $6 billion in 2022. This was pushed by sturdy recovering markets and market share features. In actual fact, this power accelerated within the fourth quarter, the place gross sales truly elevated 25% to $1.5 billion.

This power is a mirrored image of each recovering markets and Linamar’s strengths. In actual fact, Linamar has been at this for the reason that Nineteen Sixties. On this time interval, the corporate has constantly strived to develop and enhance. And so it has. This yr was a yr that marked a yr of information – file gross sales, file wins, and file market share.

Linamar units its personal path ahead

One of many issues that I actually like about Linamar is its relentless drive to remain forward of the sport. This was on full show when the corporate set it sights on diversifying away from the extremely cyclical auto provide enterprise. On the time, there have been many doubters. Right now, this technique has proven its worth. The economic section at the moment accounts for 1 / 4 of Linamar’s income and gross sales elevated 73% in This fall 2022.

Linamar has continued to point out foresight with continued enlargement into associated industries. For instance, the corporate determined so as to add the very profitable agricultural trade to its record of industries to focus on. As such, Linamar now lends its specialised manufacturing capabilities to provide this trade with its extremely specialised equipment. For instance, Linamar manufactures harvesting gear and crop fertilizer applicator gear.

The numbers say all of it

Linamar’s highway to the place it’s immediately was a protracted however regular one. Right now, Linamar’s enterprise is backed by the power of a stellar stability sheet, a robust progress profile, sturdy margins, and money circulate era. Income of just about $8 billion is up 4% versus 5 years in the past – a really spectacular feat contemplating that the worldwide economic system took considered one of its largest hits ever as a result of 2020 pandemic.

Moreover, Linamar is backed by a robust stability sheet that may proceed to assist its progress. Liquidity is robust, at $1.3 billion, web debt continues to enhance, and free money circulate of $94 million represented the tenth consecutive yr of optimistic free money circulate. And final however not least, the annual dividend on Linamar inventory was elevated by 10% to the present $0.88 per share.

Linamar is buying and selling beneath e book worth and at a mere eight occasions this yr’s EPS estimate. This valuation, coupled with sturdy progress tendencies and profitability, make Linamar inventory my primary auto inventory to purchase.