Operating Margin - ATS Automation Tooling Systems Inc (TSX:ATA)

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Price: 51.89 CAD 0.25%

Market Cap: 4.8B CAD

9.4%

Current

Average

6.5%

Industry

Operating Margin represents how efficiently a company is able to generate profit through its core operations.

Higher ratios are generally better, illustrating the company is efficient in its operations and is good at turning sales into profits.

Operating Margin

9.4%

Operating Profit

219.7m

Revenue

2.3B

Operating Margin Across Competitors

Country		Company	Market Cap	Operating Margin
CA		ATS Automation Tooling Systems Inc TSX:ATA	4.7B CAD	9%
JP	I	Ishii Iron Works Co Ltd TSE:6362	304.2T JPY	13%
US		Parker-Hannifin Corp NYSE:PH	111.6B USD	21%
JP		Mitsubishi Heavy Industries Ltd TSE:7011	14T JPY	8%
SE		Atlas Copco AB STO:ATCO A	809.3B SEK	21%
US		Illinois Tool Works Inc NYSE:ITW	74.9B USD	26%
US		Barnes Group Inc NYSE:B	72.7B USD	45%
SE		Sandvik AB STO:SAND	365.2B SEK	17%
CH		Schindler Holding AG SIX:SCHP	31.4B CHF	12%
JP		Fanuc Corp TSE:6954	5.9T JPY	21%
FI	K	Kone Oyj OMXH:KNEBV	30.8B EUR	11%

ATS Automation Tooling Systems Inc
Glance View

Market Cap

4.7B CAD

Industry

Machinery

ATS Automation Tooling Systems Inc., a name that resonates within the world of industrial automation, has carved out a distinct place for itself by focusing on efficiency and precision. Born out of Cambridge, Ontario, ATS has steadily grown since its inception in 1978 into a global leader that supplies factory automation solutions to multiple sectors, including life sciences, transportation, and consumer products. The company specializes in conceptualizing and developing sophisticated automation systems that integrate into existing production processes. This capability is particularly vital for industries where the demand for precision and reliability is paramount, such as in medical devices manufacturing or automotive assembly lines. ATS balances a rich portfolio of services including project integration, automation products, and after-sales support, which together create a comprehensive suite that addresses an array of client needs. What sets ATS apart in the competitive landscape of automation is its diverse revenue streams and robust business model. The company primarily earns its revenue by designing and building custom automation solutions—tailored systems that optimize production workflows, reduce human error, and enhance efficiency. In addition to this project-based revenue, ATS garners a considerable portion of its income from service contracts, which involve maintaining and upgrading existing systems. This ongoing support ensures long-term relationships with clients, providing an annuity-like income stream. Moreover, strategic acquisitions have propelled ATS into new geographical and technological arenas, further enhancing its market reach and technical capabilities. Through continuous innovation and a focus on high-margin, high-impact solutions, ATS Automation Tooling Systems Inc. stands as a testament to the transformative power of automation in modern industry, persistently aligning itself with evolving manufacturing needs.

View ATA Analysis

ATA Intrinsic Value

What is Intrinsic Value?

Economic Moat is a concept popularized by Warren Buffett to describe a company's durable competitive advantage. It represents the 'moat' that protects a company from competitors and helps it sustain profitability over the long term. Our analysis of the past 10 years showed that companies with a wide economic moat significantly outperformed the market, delivering +645% returns compared to +189% for the S&P 500.

Our research into Economic Moat performance spans the past 10 years and focuses on companies with a wide economic moat. For this analysis, we calculated the average stock price returns of these companies, comparing them to the performance of the S&P 500 index over the same period.

The results were compelling: wide moat stocks achieved a remarkable +645% average return, compared to +188% for the broader market. This difference highlights the long-term benefits of investing in businesses that can maintain their market position and pricing power over time.

Note: This research does not account for survivorship bias. Past performance is not indicative of future results.

Determining whether a company has an economic moat requires both a deep dive into financial metrics and a qualitative assessment of its competitive position. Our analysts conduct a rigorous evaluation that focuses on identifying structural advantages that enable a company to sustain profitability and defend its market share over the long term.

The process begins with an analysis of a company’s historical financial performance. We assess how consistently the company has generated returns above its cost of capital and whether those returns have been stable or improving. However, financial performance alone doesn’t reveal the full picture. To understand the sources of these advantages, we evaluate five key drivers of economic moats:

Network Effect: We analyze whether the value of a company’s product or service grows as its user base expands. Platforms like payment systems or marketplaces benefit from this self-reinforcing.

Switching Costs: We assess whether customers face significant costs or disruptions when switching to a competitor’s product or service. High switching costs create customer stickiness and provide pricing power.

Intangible Assets: Strong brands, patents, and regulatory licenses can protect a company’s market position by creating barriers for competitors or enabling premium pricing. For example, a well-recognized consumer brand may command higher customer loyalty and margins.

Efficient scale: Occurs when a market is optimally served by one or a few players, making it unprofitable for new entrants to compete. This typically happens in industries with high fixed costs or geographic constraints, such as utilities or pipelines.

Cost Advantage: Companies with structural cost advantages can produce goods or services at a lower cost than their competitors, enabling them to offer competitive pricing or maintain higher margins. These advantages often arise from economies of scale, superior supply chain management, or proprietary technology. Firms like Walmart leverage their massive scale to negotiate better terms with suppliers, allowing them to undercut competitors on price.

By examining these factors in combination with a company’s financial performance and market positioning, we classify each company into one of three categories:

This rigorous evaluation ensures that our moat ratings are both comprehensive and reliable, giving investors the tools they need to make well-informed, long-term decisions.

The AI Assistant may sometimes provide inaccurate information.

Make your own investment decisions or consult a licensed financial advisor.

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ATS Automation Tooling Systems Inc
TSX:ATA