![]() Justin Wu of GMP Securities, who has never backed off a $14.50 target price for the shares, believes Martinrea's actions to form a special board committee to oversee the case and add two new independent directors "will help dispel much of the concerns shareholders have." New contracts from GM, Ford and Chrysler and a new financing package "give confidence that it will be business as usual despite the litigation."Ĭanaccord Genuity's David Tyerman offers a more conservative $10.25 target price, but notes it represents an enterprise value, or market capitalization plus net debt, of just 4.5 times his next 12 months' forecast of EBITDA (earnings before interest, taxes, depreciation and amortization.) The industry average multiple, he says, is 6.5. But at Friday's close of $8.59, they remain well below their 52-week high and trade at a significant discount to nearly every peer in the industry. The shares have regained a portion, but not all, of the 21 per cent tumble they took on that news. It also said it had discovered one of its Canadian plants misreported financial results from 2005 to 2012, which led Martinrea to overstate its profits by $10-million to $18-million in total. In December, the company acknowledged that it will miss fourth-quarter earnings expectations due to litigation costs and operational issues at a plant in Kentucky. (None of the allegations, by either party, have been proved or examined in court.) Rea updated his lawsuit with additional allegations. Over the course of the next few months, the company filed a counterclaim seeking damages for abuse of process, and Mr. In September, Martinrea's former vice-chairman, Nat Rea, filed a lawsuit in Ontario Superior Court that accused company officers and directors and a former chief executive officer with breaching their fiduciary duties and engaging in corrupt practices. By the late summer of 2013, its shares were close to double the levels of the prior year. ![]() With a variety of products, including an aluminum diecasting business set for growth as carmakers explored lighter-weight vehicles, Martinrea was a full participant in the industry's rebound. ![]() that gave it the latter half of its name. Or wager on the much riskier Martinrea, and hope to generate even more sizable returns - if the company can get its house in order.įor the past 15 years, Martinrea has grown through a series of acquisitions, particularly the 2002 deal for Rea International Inc. The current environment sets up an interesting choice for investors intrigued by the sector: Pick from the two bigger, more stable players and bet on future gains from a continuing auto rebound. ![]()
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