Yahoo Finance Should You Invest In The Automobile Stock Martinrea International Inc (TSE:MRE)?
Martinrea International Inc (TSE:MRE), a CA$1.18b small-cap, is an auto company operating in an industry whose long product cycles and deep capital outlays make planning ahead difficult. New growth opportunities in smart cars and software is not the traditional focus for most auto companies. Automobile analysts are forecasting for the entire industry, a strong double-digit growth of 22.3% in the upcoming year , and a massive growth of 47.0% over the next couple of years. This rate is larger than the growth rate of the Canadian Below, I will examine the sector growth prospects, and also determine whether Martinrea International is a laggard or leader relative to its automobile sector peers.
See our latest analysis for Martinrea International
What’s the catalyst for Martinrea International’s sector growth?
The growing presence in the auto industry of technology firms incontrovertible. Over the past year, the industry saw growth of 9.3%, though still underperforming the wider Canadian stock market. Martinrea International leads the pack with its impressive earnings growth of 19.6% over the past year. However, analysts are not expecting this industry-beating trend to continue, with future growth expected to be 16.6% compared to the wider automobile sector growth hovering in the twenties next year. As a future industry laggard in growth, Martinrea International may be a cheaper stock relative to its peers.
Is Martinrea International and the sector relatively cheap?
The automobile sector’s PE is currently hovering around 15x, relatively similar to the rest of the Canadian stock market PE of 15.53x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. However, the industry returned a higher 14.7% compared to the market’s 10.5%, potentially illustrative of a turnaround. On the stock-level, Martinrea International is trading at a lower PE ratio of 6.57x, making it cheaper than the average automobile stock. In terms of returns, Martinrea International generated 16.3% in the past year, which is 1.6% over the automobile sector.
Next Steps:
Martinrea International is an automobile industry laggard in terms of its future growth outlook. This is possibly reflected in the PE ratio, with the stock trading below its peers. If the stock has been on your watchlist for a while, now may be the time to dig deeper. Although the market is expecting lower growth for the company relative to its peers, Martinrea International is also trading at a discount, meaning that there could be some value from a potential mispricing. However, before you make a decision on the stock, I suggest you look at Martinrea International’s fundamentals in order to build a holistic investment thesis.
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Historical Track Record: What has MRE’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Martinrea International? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
