MRE.TO  Martinrea International Inc

Exchange

TSX

Sector

Diversified Industries

Industry

Market Cap.

767.98B

Vuru Grade

32.50/100

Current Price

$8.88
-0.04 (-0.45%)

Growth Price

$8.76
Fairly valued

Stability Price

$25.24
Undervalued by 184.24%

Company Metrics

  • P/E 8.62
  • P/S 192.22
  • P/B 0.98
  • EPS 1.03
  • Cash ROIC -5.24%
  • Cash Ratio 0.03
  • Dividend 0.09 / 1.48 %
  • Avg. Vol. 280,678.00
  • Shares 86.37M
  • Market Cap. 767.98B

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. (MRE:CA) Declines 6.12% for January 16
Equities.com - Jan 16, 2017
It was a tough day for Martinrea International Inc. (MRE:CA) as its stock fell 6.12% to finish the day at $8.28 a share on January 16.
Martinrea Hot Stampings in Detroit to lay off 68 workers
Crain's Detroit Business - Jul 5, 2016
Ontario-based Martinrea International Inc. plans to lay off 68 employees next month at its Detroit subsidiary as Fiat Chrysler discontinues production of certain models.
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. to Appoint Pat D'Eramo as President and Chief ...
Marketwired (press release) - Oct 20, 2014
TORONTO, ONTARIO--(Marketwired - Oct. 20, 2014) - Martinrea International Inc. (TSX:MRE) ("Martinrea" or the "Company") today announced that Pat D'Eramo will be appointed as Martinrea's next President and Chief Executive Officer.
The Martinrea International Inc. (MRE) Price Target Cut to C$9.00
DailyQuint - Feb 16, 2017
Martinrea International logo Martinrea International Inc. (TSE:MRE) had its target price cut by equities research analysts at CIBC from C$10.00 to C$9.00 in a note issued to investors on Tuesday.
Martinrea International Inc. Purchases Minority Interest of Martinrea Honsel
Marketwired (press release) - Aug 7, 2014
TORONTO, ONTARIO--(Marketwired - Aug. 7, 2014) - Martinrea International Inc. (TSX:MRE) ("Martinrea" or the "Company") announced that it has acquired from Anchorage Capital Group, L.L.
Martinrea International Inc. to Announce Third Quarter Results on November 3, 2016
Marketwired (press release) - Oct 28, 2016
TORONTO, ONTARIO--(Marketwired - Oct. 28, 2016) - Martinrea International Inc. (TSX:MRE) today announced that it will report its financial results for the third quarter ended September 30, 2016 at close of business on November 3, 2016.
Q1 2017 Earnings Forecast for Martinrea International Inc. (MRE) Issued By Cormark
Sports Perspectives - Feb 2, 2017
Martinrea International logo Martinrea International Inc. (TSE:MRE) - Cormark dropped their Q1 2017 earnings estimates for shares of Martinrea International in a report released on Wednesday.
Cormark Comments on Martinrea International Inc.'s FY2016 Earnings (MRE)
Sports Perspectives - Jan 24, 2017
Martinrea International logo Martinrea International Inc. (TSE:MRE) - Investment analysts at Cormark decreased their FY2016 earnings per share (EPS) estimates for Martinrea International in a report issued on Friday.
Martinrea International Inc. (MRE) Earns Outperform Rating from Royal Bank Of ...
Sports Perspectives - Jan 17, 2017
Martinrea International Inc. logo Royal Bank Of Canada reiterated their outperform rating on shares of Martinrea International Inc. (TSE:MRE) in a report issued on Thursday, StockTargetPrices.com reports. They currently have a C$14.00 price target on ...
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.

$8.88 Current Price

$8.76 Growth Price (DCF)

Fairly valued


Growth Rate Assumed by Market: 500.00%


Future Free Cash Flow Growth Rate: 0.0%


Discount Rate: 15.0%


MRE.TO's most recent year of (normalized) free cash flow is negative. This is the base number for forward projections. This means that if you increase the growth rate, the amount of negative FCF grows, thereby decreasing the price.

Show Free Cash Flow numbers

$25.24 Stability Price (EPV)

Undervalued by 184.24%


Discount Rate: 15.0%

$12.14 Book Price

Undervalued by 36.75%


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 $5.24 of cash for every $100 invested.
Figures in CAD. Fiscal year ends in December
20112012201320142015
Free Cash Flow -114.45M -126.97M -59.17M 40.23M -2.14M
divided by
Invested Capital 927.05M 1.07B 1.20B 1.34B 1.60B
Cash ROIC -12.35% -11.82% -4.91% 3.00% -0.13%

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 $11.26 of Earnings for every $100 of Shareholders' Equity.
Figures in CAD. Fiscal year ends in December
20112012201320142015
Net Income 54.53M 33.86M 37.93M 89.42M 107.17M
divided by
Stockholders' Equity 469.56M 471.32M 464.30M 575.99M 776.33M
Return on Equity 11.61% 7.18% 8.17% 15.52% 13.81%

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
2006200720082009201020112012201320142015
Free Cash Flow -33.87M -34.57M -10.57M -55.10M -10.80M -114.45M -126.97M -59.17M 40.23M -2.14M

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
2006200720082009201020112012201320142015
Cash 63.50M 48.01M 60.97M 22.77M 32.02M 28.77M 31.80M 56.22M 52.40M 28.90M
Current Assets 598.51M 516.32M 435.43M 405.55M 432.44M 683.41M 786.22M 917.49M 905.04M 995.94M
Total Assets 1.43B 1.32B 1.06B 1.08B 931.12M 1.42B 1.67B 1.92B 2.11B 2.46B
Current Liabilities 414.65M 304.80M 248.98M 238.94M 270.58M 461.68M 560.81M 663.76M 720.03M 831.97M
Total Liabilities 860.38M 597.94M 539.72M 580.82M 411.92M 947.94M 1.20B 1.46B 1.54B 1.69B
Stockholder' Equity 570.33M 721.47M 517.08M 502.94M 519.21M 469.56M 471.32M 464.30M 575.99M 776.33M
Current Ratio 1.44 1.69 1.75 1.70 1.60 1.48 1.40 1.38 1.26 1.20
TL-to-TA 0.60 0.45 0.51 0.54 0.44 0.67 0.72 0.76 0.73 0.68

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
2006200720082009201020112012201320142015
Retained Earnings 70.59M 131.05M -130.54M -155.48M -122.55M -169.01M -142.08M -142.38M -219.48M -123.16M
Retained Earnings Growth - 85.66% -199.61% -19.11% 21.18% -37.91% 15.93% -0.21% -54.16% 43.89%

Highly Competitive Industry over the past 10 years

It's likely that MRE.TO is in an industry with low barriers to entry, spurring high competition. If Gross Margins are at least satisfactory, it's likely MRE.TO invests heavily in R&D and Sales, General & Administrative expenses.

Only $0.05 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in CAD. Fiscal year ends in December
2006200720082009201020112012201320142015
Net Income 38.29M 60.47M -261.09M -24.94M 32.99M 54.53M 33.86M 37.93M 89.42M 107.17M
divided by
Revenue 871.51M 2.00B 1.56B 1.14B 1.69B 2.19B 2.90B 3.22B 3.60B 3.87B
Net Profit Margin 4.39% 3.02% -16.77% -2.19% 1.95% 2.49% 1.17% 1.18% 2.48% 2.77%

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 $19.30 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
2006200720082009201020112012201320142015
Gross Profit 146.78M 255.57M 127.29M 75.10M 159.90M 2.18B 277.09M 324.04M 347.89M 402.23M
divided by
Revenue 871.51M 2.00B 1.56B 1.14B 1.69B 2.19B 2.90B 3.22B 3.60B 3.87B
Gross Margin 16.84% 12.76% 8.18% 6.60% 9.46% 99.53% 9.55% 10.06% 9.67% 10.40%

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.

308.76% 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
2006200720082009201020112012201320142015
Capital Expenditure 68.39M 83.48M 66.40M 51.41M 90.93M 149.47M 222.56M 194.97M 224.12M 194.77M
divided by
Net Income 38.29M 60.47M -261.09M -24.94M 32.99M 54.53M 33.86M 37.93M 89.42M 107.17M
Capital Expenditure Ratio 178.63% 138.06% -25.43% -206.15% 275.61% 274.10% 657.26% 514.03% 250.65% 181.74%

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
2006200720082009201020112012201320142015
Dividend Paid - - - - - - - - - -
divided by
Shares Outstanding 61.75M 67.18M 72.51M 78.43M 84.46M 84.11M 83.55M 84.98M 85.51M 86.37M
Dividend Paid Per Share - - - - - - - - - -
Price at Year End 11.90 11.92 2.27 8.53 8.93 7.45 7.75 7.76 10.39 10.55
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
2006200720082009201020112012201320142015
Shares Outstanding 61.75M 67.18M 72.51M 78.43M 84.46M 84.11M 83.55M 84.98M 85.51M 86.37M
Stock Bought Back - -8.08% -7.34% -7.55% -7.14% 0.41% 0.67% -1.69% -0.62% -0.99%
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