Martinrea is an undervalued stock, this analyst says

Paradigm Capital analyst Marvin Wolff maintained his “Buy” rating and C$13.75 target price for Martinrea International (Martinrea International Stock Quote, Chart, News, Analysts, Financials TSX:MRE) in an Oct. 5 research report, highlighting the company’s earnings growth potential across multiple fronts and its discounted valuation relative to book value.

Martinrea is a Canadian-based auto parts manufacturer with operations in Canada, the U.S. and Mexico, specializing in aluminum and metal forming, including hydroforming, fuel and brake lines, and sub-assembly for high-volume platforms. It also holds a 23% stake in NanoXplore, a graphene producer.

Wolff said Martinrea provides a growth story driven by new mandate wins, margin expansion through lightweighting solutions, and operating efficiencies. He noted that profitability over the next two years will depend in part on U.S. tariff levels, while upcoming NanoXplore contract announcements and capacity expansions could provide additional catalysts.

September U.S. auto sales came in at 16.4 million units, with EV sales up 41% year over year. Wolff said that the rush to lock in pre-tariff vehicle purchases has likely passed, and expects normalization in Q4. He added that tariff exposure for Martinrea remains limited, with CUSMA rules shielding most North American parts from tariffs; only about 5% of Martinrea’s revenue comes from Europe, where tariffs apply.

Martinrea ended the quarter with $160-million in cash and a debt-to-EBITDA ratio of 1.5x. The company is guiding to 2025 revenue of $4.8–$5.1 billion, operating margins of 5.3%–5.8% and free cash flow of $125–$175 million after $300-million in capex. The company has suspended its share buyback program to preserve cash but maintained its dividend.

Wolff forecasts Martinrea will generate approximately $587.1-million in Adjusted EBITDA on revenue of $4.97-billion in fiscal 2025, improving to $624.0-million on $5.56-billion in fiscal 2026.

He said that Martinrea trades at 0.53× book value, or 0.42× when adjusting for its NanoXplore stake, and values the auto parts business at 4.9× 2025e EPS of $2.02, or $9.70 per share, plus $4.00 for its NanoXplore ownership.

“We note our target price is 68% of book value,” Wolff said. “In general, auto sales have been stronger in 2025 than most thought; however, the wind may currently be turning against that trend. Despite this backdrop, MRE shares are trading at attractive depressed levels.”

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