Contrasting Linamar (OTCMKTS:LIMAF) and Lear (NYSE:LEA)

Linamar (OTCMKTS:LIMAF) and Lear (NYSE:LEA) are both consumer discretionary companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, risk, dividends, analyst recommendations, institutional ownership and earnings.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Linamar and Lear, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Linamar	0	2	3	0	2.60
Lear	0	10	5	1	2.44

Lear has a consensus target price of $145.23, suggesting a potential upside of 22.11%. Given Lear’s higher probable upside, analysts plainly believe Lear is more favorable than Linamar.

Insider and Institutional Ownership

25.1% of Linamar shares are held by institutional investors. Comparatively, 97.0% of Lear shares are held by institutional investors. 1.0% of Lear shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Linamar pays an annual dividend of $0.38 per share and has a dividend yield of 0.5%. Lear pays an annual dividend of $3.08 per share and has a dividend yield of 2.6%. Linamar pays out 7.8% of its earnings in the form of a dividend. Lear pays out 28.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Profitability

This table compares Linamar and Lear’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Linamar	N/A	N/A	N/A
Lear	2.35%	14.18%	4.88%

Earnings & Valuation

This table compares Linamar and Lear”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Linamar	N/A	N/A	N/A	$4.85	15.67
Lear	$23.26 billion	0.25	$436.80 million	$10.73	11.08

Lear has higher revenue and earnings than Linamar. Lear is trading at a lower price-to-earnings ratio than Linamar, indicating that it is currently the more affordable of the two stocks.

Summary

Lear beats Linamar on 11 of the 14 factors compared between the two stocks.

About Linamar

Linamar Corporation, together with its subsidiaries, produces engineered products in Canada, Europe, the Asia Pacific, and rest of North America. It operates through two segments, Mobility and Industrial. The Mobility segment focuses on light metal casting, forging, machining, and assembly for electrified and powered vehicle markets. It also focuses on components and systems for global mobility market; and design, development, and testing services. The Industrial segment manufactures scissor, boom, and telehandler lifts for the aerial work platform industry. This segment also manufactures draper headers and self-propelled windrowers for the agricultural harvesting industry, as well as supplies farm tillage and crop fertilizer application equipment. Linamar Corporation was founded in 1964 and is headquartered in Guelph, Canada.

About Lear

Lear Corporation designs, develops, engineers, manufactures, assembles, and supplies automotive seating, and electrical distribution systems and related components for automotive original equipment manufacturers in North America, Europe, Africa, Asia, and South America. Its Seating segment offers seat systems, seat subsystems, keyseat components, seat trim covers, seat mechanisms, seat foams, and headrests, as well as surface materials, such as leather and fabric for automobiles and light trucks, compact cars, pick-up trucks, and sport utility vehicles. The company’s E-Systems segment provides electrical distribution and connection systems that route electrical signals and networks; and manage electrical power within the vehicle for various powertrains. This segment’s products comprise wire harnesses, terminals and connectors, engineered components, and junction boxes; electronic system products, including body domain control modules, smart and passive junction boxes, gateway and communication modules, integrated power modules, and high voltage switching and power control systems. It also offers software and connected services comprising Xevo Market, an in-vehicle commerce and service platform; and software and services for the cloud, vehicles, and mobile devices. In addition, this segment provides cybersecurity software; advanced vehicle positioning for automated and autonomous driving applications; and short-range communication and cellular protocols for vehicle connectivity. It offers its products and services under the XEVO, GUILFORD, EAGLE OTTAWA, ConfigurE+, INTUTM, LEAR CONNEXUSTM, EXO, JOURNEYWARE, ProTec, SMART JUNCTION BOX, STRUCSURE, AVENTINO, and TeXstyle brands. Lear Corporation was founded in 1917 and is headquartered in Southfield, Michigan.