MRE.TO  Martinrea International Inc

Exchange

TSX

Sector

Diversified Industries

Industry

Market Cap.

930.87M

Vuru Grade

14.06/100

Current Price

$10.76
-0.11 (-1.01%)

Growth Price

$11.01
Fairly valued

Company Metrics

  • P/E 6.18
  • P/S 0.24
  • P/B 1.04
  • EPS 1.74
  • Cash ROIC -2.53%
  • Cash Ratio 0.08
  • Dividend 0.09 / 1.1%
  • Avg. Vol. 190,629.00
  • Shares 86.51M
  • Market Cap. 930.87M

Company Description

Martinrea International Inc., together with its subsidiaries, designs, engineers, manufactures, and sells metal parts, assemblies and modules, and fluid management systems primarily for the automotive industry in the United States, Canada, Mexico, and Europe. The company offers engine and transmission products comprising transmission oil coolers, hose and tube assemblies, engine oil coolers, trans... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Martinrea International Inc. Holds Annual General Meeting
Marketwired (press release) - Jun 15, 2017
TORONTO, ONTARIO--(Marketwired - June 15, 2017) - Martinrea International Inc. (TSX:MRE) ("Martinrea" or the "Company") a leader in the development and production of quality metal parts, assemblies and modules, fluid management systems and ...
Martinrea International: Improving Margins To Drive Share Price Higher
Seeking Alpha - Apr 25, 2017
Martinrea International Inc. (OTCPK:MRETF) is a Canadian tier one automotive parts supplier operating 44 facilities in eight countries, including Canada, USA, Mexico, Brazil, Germany Slovakia, Spain and China.
Why Did Martinrea International Inc. Shares Soar 6.75%?
The Motley Fool Canada - Aug 10, 2017
Martinrea International Inc. (TSX:MRE) reported its first-quarter results this week that were above expectations, and management highlighted the fact that the future is looking bright.
Martinrea International Inc (TSE:MRE) Price Target Increased to C$15.50 by ... - Week Herald
Martinrea International Inc - Receive News & Ratings Daily - TheOlympiaReport
Martinrea International Inc. to announce first quarter results on May 1, 2017
Marketwired (press release) - Apr 24, 2017
TORONTO, ONTARIO--(Marketwired - April 24, 2017) - Martinrea International Inc. (TSX:MRE) today announced that it will report its financial results for the first quarter ended March 31, 2017 on May 1, 2017.
Martinrea International Inc. Releases First Quarter Results and Announces Dividend
Marketwired (press release) - May 3, 2016
TORONTO, ONTARIO--(Marketwired - May 3, 2016) - Martinrea International Inc. (TSX:MRE), a leader in the development and production of quality metal parts, assemblies and modules and fluid management systems and complex aluminum products focused ...
Martinrea International Inc (TSX:MRE): Does It Need To Change Executive Pay ...
Simply Wall St - Aug 9, 2017
Pat D'Eramo leads Martinrea International Inc (TSX:MRE), a company with a market capitalization of CAD$916.16M. D'Eramo, who was appointed CEO in 2014, took home a sum of $2,792,055 last year as remuneration.
Don't Be Fooled By Short-Run Market Pessimism
Seeking Alpha - Apr 12, 2017
Now that the company has built a name for itself in the industry by cultivating an established operating base, the focus has now shifted to growing operational efficiency and margin improvement.
Martinrea International (MRETF) CEO Pat D'Eramo on Q3 2016 Results - Earnings ...
Seeking Alpha - Nov 6, 2016
Good morning, ladies and gentlemen. Welcome to the Martinrea International Third Quarter Results for 2016 Conference Call. Instructions for submitting questions will be provided to you later in the call.
Forget Magna International Inc.: Invest in Martinrea International Inc. Instead
The Motley Fool Canada - May 3, 2017
Martinrea International Inc. (TSX:MRE) reported its first-quarter results today, and they were above expectations. Management highlighted the fact that the future is looking bright.
Canadian supplier to bring 60 jobs to Auburn Hills, breaks ground on tech center
The Oakland Press - Oct 18, 2016
Executives from the city of Auburn Hills, Oakland County and Martinrea International Inc. raise shovels of dirt to break ground on the new Martinrea technical center on Monday, Oct. 17, 2016 at 2100 Opdyke Road in Auburn Hills.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for MRE.TO to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate MRE.TO's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$10.76 Current Price

$11.01 Growth Price (DCF)

Fairly valued


Growth Rate Assumed by Market: -4.88%


Future Free Cash Flow Growth Rate: 0.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$12.59 Book Price

Undervalued by 17.03%


Very Poor Cash Return on Invested Capital over the past 5 years

MRE.TO has failed to generate positive returns on its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

MRE.TO has lost $2.53 of cash for every $100 invested.
Figures in CAD. Fiscal year ends in December
20122013201420152016
Free Cash Flow -126.97M -59.17M 40.23M -2.14M 20.18M
divided by
Invested Capital 1.07B 1.20B 1.34B 1.60B 1.65B
Cash ROIC -11.82% -4.91% 3.00% -0.13% 1.22%

Growing Return on Equity over the past 5 years

MRE.TO has been growing returns with capital that shareholders have invested. This is a positive sign and demonstrates that both the business and management performance are improving over time.

MRE.TO has generated $11.15 of Earnings for every $100 of Shareholders' Equity.
Figures in CAD. Fiscal year ends in December
20122013201420152016
Net Income 33.86M 37.93M 89.42M 107.17M 91.96M
divided by
Stockholders' Equity 471.32M 464.30M 575.99M 776.33M 830.20M
Return on Equity 7.18% 8.17% 15.52% 13.81% 11.08%

Poor Business Performance over the past 10 years

MRE.TO's inability to produce positive free cash flow for the majority of the past 10 years is concerning. It should be a red flag, since this company does not have a track record of delivering results for shareholders. This could be due to poor management or the nature of its business.

MRE.TO has been losing money for the majority of the past 10 years.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Free Cash Flow -34.57M -10.57M -55.10M -10.80M -114.45M -126.97M -59.17M 40.23M -2.14M 20.18M

Weak Balance Sheet

MRE.TO's financial position is not ideal. The key is to check whether MRE.TO is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Cash 48.01M 60.97M 22.77M 32.02M 28.77M 31.80M 56.22M 52.40M 28.90M 59.17M
Current Assets 516.32M 435.43M 405.55M 432.44M 683.41M 786.22M 917.49M 905.04M 995.94M 958.28M
Total Assets 1.32B 1.06B 1.08B 931.12M 1.42B 1.67B 1.92B 2.11B 2.46B 2.47B
Current Liabilities 304.80M 248.98M 238.94M 270.58M 461.68M 560.81M 663.76M 720.03M 831.97M 760.30M
Total Liabilities 597.94M 539.72M 580.82M 411.92M 947.94M 1.20B 1.46B 1.54B 1.69B 1.64B
Stockholder' Equity 721.47M 517.08M 502.94M 519.21M 469.56M 471.32M 464.30M 575.99M 776.33M 830.20M
Current Ratio 1.69 1.75 1.70 1.60 1.48 1.40 1.38 1.26 1.20 1.26
TL-to-TA 0.45 0.51 0.54 0.44 0.67 0.72 0.76 0.73 0.68 0.66

Low or No Reinvestment of Profits over the past 10 years

MRE.TO has either been retaining a small amount of their earnings or has done so inconsistently. A lack of consistency could be due to MRE.TO operating at a loss or them having such a strong economic moat they feel comfortable spending profits on growth. Be wary of future prospects and if applicable, inspect the moat's sustainability.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Retained Earnings 131.05M -130.54M -155.48M -122.55M -169.01M -142.08M -142.38M -219.48M -123.16M -40.02M
Retained Earnings Growth - -199.61% -19.11% 21.18% -37.91% 15.93% -0.21% -54.16% 43.89% 67.50%

Loss Making Entity over the past 10 years

MRE.TO has been unable to maintain profitability. It's Costs of Sales have outstripped Revenue consistently. This is a huge red flag, unless the company has been investing heavily for the future. However, even that is dubious since accurately predicting the future of a company like that is extremely difficult.

$0.16 of every $100 of Revenue have been a loss, on average over the past 10 years.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Net Income 60.47M -261.09M -24.94M 32.99M 54.53M 33.86M 37.93M 89.42M 107.17M 91.96M
divided by
Revenue 2.00B 1.56B 1.14B 1.69B 2.19B 2.90B 3.22B 3.60B 3.87B 3.97B
Net Profit Margin 3.02% -16.77% -2.19% 1.95% 2.49% 1.17% 1.18% 2.48% 2.77% 2.32%

Weak Pricing Power over the past 10 years

MRE.TO is likely in a highly competitive industry, due to low barriers to entry. It's because of this, that MRE.TO has been unable to raise prices and increase their profitability. This puts them in a poor position if inflation becomes an issue, as they would struggle to pass higher costs onto consumers.

Only $18.71 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Gross Profit 255.57M 127.29M 75.10M 159.90M 2.18B 277.09M 324.04M 347.89M 402.23M 432.05M
divided by
Revenue 2.00B 1.56B 1.14B 1.69B 2.19B 2.90B 3.22B 3.60B 3.87B 3.97B
Gross Margin 12.76% 8.18% 6.60% 9.46% 99.53% 9.55% 10.06% 9.67% 10.40% 10.89%

High Capital Intensity over the past 10 years

MRE.TO spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

318.99% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Capital Expenditure 83.48M 66.40M 51.41M 90.93M 149.47M 222.56M 194.97M 224.12M 194.77M 239.53M
divided by
Net Income 60.47M -261.09M -24.94M 32.99M 54.53M 33.86M 37.93M 89.42M 107.17M 91.96M
Capital Expenditure Ratio 138.06% -25.43% -206.15% 275.61% 274.10% 657.26% 514.03% 250.65% 181.74% 260.47%

No Dividend History over the past 10 years

MRE.TO has never distributed dividends or has recently suspended their dividend distribution.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Dividend Paid - - - - - - - - - -
divided by
Shares Outstanding 67.18M 72.51M 78.43M 84.46M 84.11M 83.55M 84.98M 85.51M 86.37M 86.53M
Dividend Paid Per Share - - - - - - - - - -
Price at Year End 11.92 2.27 8.53 8.93 7.45 7.75 7.76 10.39 10.55 8.59
Dividend Yield - - - - - - - - - -

History of Stock Buybacks over the past 10 years

MRE.TO has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in CAD. Fiscal year ends in December
2007200820092010201120122013201420152016
Shares Outstanding 67.18M 72.51M 78.43M 84.46M 84.11M 83.55M 84.98M 85.51M 86.37M 86.53M
Stock Bought Back - -7.34% -7.55% -7.14% 0.41% 0.67% -1.69% -0.62% -0.99% -0.18%
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