On Tuesday, markets declined in further reaction to Trump’s trade tariff threats against China.
The S&P 500 was down 1.65% while Toronto was down 0.8%.
The larger decliners included : Linamar, down 2.9%; WSP Global, down 3.5%; Constellation Software down 3.5%
Regarding Linamar, I read the conference call transcript today and got a better sense of their outlook. Management is projecting a mid-single digit rise in normalized operating earnings – despite weakness in a number of its markets. It was not clear, but this probably means that actual adjusted net earnings per share will be flat to down slightly since interest costs and depreciation will be higher. It appears that Q2 will show an earnings decline and the company expects results to start to improve in the last half of the year. So the company does face some headwinds. But the stock price seems to more than reflect that and appears very cheap. I added somewhat to my position. Despite the low valuation the stock could certainly struggle given negative market sentiment towards this industry and given some decline in earnings from the excellent levels of 2018. This is another stock that will require considerable patience.