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Lear Corp (LEA)
NYSE:LEA
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Lear
(NYSE:LEA)71Outperform
Positive Factors
Financial Performance
Lear reported better than expected results, exceeding expectations for adjusted EBITDA and Net Income.
Strategic Gains
Large conquest wins in e-systems and strong China performance highlight strategic gains.
Negative Factors
Revenue Guidance
2025 revenue guidance was below expectations, despite profitability outlook being better than expected.
Lear (LEA) vs. S&P 500 (SPY)
Market Cap
$4.79B
Dividend Yield3.45%
Average Volume (3M)710.94K
Price to Earnings (P/E)10.0
Beta (1Y)0.86
Revenue Growth-0.70%
EPS Growth-7.27%
CountryUS
Employees173,700
SectorConsumer Cyclical
Sector Strength53
IndustryVehicles
Share Statistics
EPS (TTM)8.94
Shares Outstanding53,637,383
10 Day Avg. Volume594,660
30 Day Avg. Volume710,942
Financial Highlights & Ratios
PEG Ratio19.67
Price to Book (P/B)N/A
Price to Sales (P/S)0.21
Price to Cash Flow (P/CF)1.80
P/FCF Ratio1.80
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$118.88Price Target Upside26.32% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering8
Lear Business Overview & Revenue Model
Company DescriptionLear Corp. engages in the design, manufacture and supply of automotive seat, electrical distribution systems and electronic modules, as well as related sub-systems, components, and software. It operates through the following segments: Seating and E-Systems. The Seating segment consists of the design, engineering, just-in-time assembly and delivery of complete seat systems, as well as the manufacture of all major seat components, including seat covers and surface materials such as leather and fabric, seat structures and mechanisms, seat foam and headrests. The E-System segment consists of the design, development, engineering and manufacture of electrical distribution systems, as well as electronic control modules, electrification products, connectivity products and software solutions for the cloud, vehicles and mobile devices. The company was founded in 1917 and is headquartered in Southfield, MI.
How the Company Makes MoneyLear Corporation generates revenue through the manufacture and sale of automotive seating and electrical components to major global automotive manufacturers. The company’s Seating segment earns money by supplying complete seat systems and components to customers, which include all major automotive OEMs. The E-Systems segment contributes to revenue by providing electrical distribution systems and electronic components that support vehicle connectivity and electrification. Lear maintains strategic partnerships and long-term supply agreements with key automotive manufacturers, ensuring stable demand for its products. Additionally, the company invests in innovation to enhance its product offerings and adapt to industry trends such as electric vehicles and smart car technologies.
Lear Financial Statement Overview
Summary
Lear's financial performance is solid, with consistent revenue generation and a strong equity base. However, profitability margins are under pressure, and cash flow variability indicates potential capital management challenges.Income Statement
Lear's income statement reveals a mixed performance. The Gross Profit Margin has been consistent, but there's a notable decline in Net Profit Margin from previous years. Revenue growth has fluctuated, with some recent declines. The EBIT margin has decreased over time. The absence of EBITDA data for 2024 limits full margin analysis for that year. Consistent revenue generation is a strength, but margin pressures are a concern.68
Positive
Balance Sheet
The balance sheet shows a healthy equity base with a moderate Debt-to-Equity Ratio, indicating manageable leverage levels. Return on Equity has shown improvement, indicating efficient use of equity to generate profits. The Equity Ratio remains stable, highlighting a strong asset base. Overall, Lear's balance sheet reflects financial stability with controlled leverage.75
Positive
Cash Flow
Lear's cash flow statement indicates relatively stable Operating Cash Flows, but Free Cash Flow growth has been inconsistent. The Operating Cash Flow to Net Income Ratio suggests efficient cash generation relative to net income. However, fluctuating Free Cash Flow points to variability in capital expenditure and cash management. Overall, cash flow management is adequate, though with room for improvement.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 23.31B | 23.47B | 20.89B | 19.26B | 17.05B | Gross Profit |
| 1.64B | 1.84B | 1.41B | 1.39B | 1.11B | EBIT |
| 0.00 | 536.50M | 607.90M | 675.30M | 398.90M | EBITDA |
| 1.46B | 1.66B | 1.18B | 1.25B | 1.13B | Net Income Common Stockholders |
| 506.60M | 572.50M | 327.70M | 373.90M | 158.50M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 1.05B | 1.20B | 1.11B | 1.32B | 1.31B | Total Assets |
| 14.03B | 14.70B | 13.76B | 13.35B | 13.20B | Total Debt |
| 2.91B | 2.92B | 2.61B | 2.60B | 2.31B | Net Debt |
| 1.86B | 1.73B | 1.50B | 1.28B | 1.01B | Total Liabilities |
| 9.43B | 9.63B | 8.93B | 8.54B | 8.58B | Stockholders Equity |
| 2.86B | 4.92B | 4.83B | 4.81B | 4.61B |
| Cash Flow | Free Cash Flow | |||
| 561.40M | 622.80M | 383.20M | 85.00M | 210.80M | Operating Cash Flow |
| 1.12B | 1.25B | 1.02B | 670.10M | 663.10M | Investing Cash Flow |
| -543.00M | -761.50M | -830.30M | -646.70M | -468.80M | Financing Cash Flow |
| -693.90M | -419.50M | -387.30M | -13.60M | -411.70M |
Lear Technical Analysis
Negative
94.11
Price Trends
94.88
Negative
96.88
Negative
105.46
Negative
Market Momentum
-0.61
Positive
47.42
Neutral
28.87
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LEA, the sentiment is Negative. The current price of 94.11 is below the 20-day moving average (MA) of 95.71, below the 50-day MA of 94.88, and below the 200-day MA of 105.46, indicating a bearish trend. The MACD of -0.61 indicates Positive momentum. The RSI at 47.42 is Neutral, neither overbought nor oversold. The STOCH value of 28.87 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LEA.
Lear Risk Analysis
Lear disclosed 29 risk factors in its most recent earnings report. Lear reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Lear Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $7.19B | 11.51 | 28.38% | 2.87% | -0.80% | 39.95% | |
71 Outperform | $4.79B | 9.95 | 17.69% | 3.45% | -0.70% | -7.27% | |
65 Neutral | $1.18B | 896.82 | 1.23% | ― | -5.42% | -99.08% | |
64 Neutral | $2.00B | ― | -4.28% | 2.90% | -2.57% | -248.28% | |
62 Neutral | $6.15B | 18.70 | 6.11% | 1.53% | -11.10% | -46.32% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% |
* Consumer Cyclical Sector Average
Performance Comparison
LEA
Lear
94.11
-42.17
-30.94%
ALV
Autoliv
98.01
-17.05
-14.82%
BWA
BorgWarner
29.19
-2.33
-7.39%
DAN
Dana Holding
14.43
2.46
20.55%
MGA
Magna International
36.81
-14.99
-28.94%
ADNT
Adient
14.92
-19.71
-56.92%
Lear Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: 0.72% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Neutral
The earnings call presents a mixed sentiment. Lear Corporation reported strong revenue and earnings growth, significant share repurchase activities, and strategic advancements in China and product innovation. However, these positives are counterbalanced by a decline in sales and operating margins, challenges in the E-Systems segment, a reduced sales backlog, and overall market production challenges.Highlights
Record Revenue and Earnings Growth
Lear Corporation generated $23.3 billion of revenue in 2024, with a 5% increase in adjusted earnings per share, marking the fourth consecutive year of growth in this metric.
Strong Free Cash Flow and Share Repurchase
Lear achieved their target of 80% free cash flow conversion, surpassing the $325 million share repurchase target by buying back $400 million worth of shares.
Strategic Growth in China
Revenue from Chinese domestic automakers grew from 20% to 33% in 2024 and is expected to increase to more than 37% in 2025, with significant new launches planned.
Innovation and Product Launches
Lear introduced the Comfort Flex module and ComfortMax seat, securing 19 contracts and expanding their competitive edge in the market.
Lowlights
Decline in Sales and Adjusted Operating Margins
Sales declined 2% year over year to $5.7 billion in Q4 2024, with adjusted operating earnings dropping 5% compared to 2023.
Challenges in E-Systems Segment
Despite a strong backlog, E-Systems faced negative net performance and foreign exchange impacts, with a decrease in margins from 5.6% to 5% in Q4 2024.
Lower 2025 Sales Backlog
The 2025 sales backlog was reduced primarily due to lower production assumptions for various vehicles, including GM EVs and Volvo models, from $800 million to $230 million.
Global Market Production Challenges
Global vehicle production is expected to be 1% lower in 2025 than in 2024, with significant regional declines in North America and Europe.
Company Guidance
During the Lear Corporation Fourth Quarter and Full Year 2024 Earnings Conference Call, several key financial metrics and strategic initiatives were highlighted, providing guidance for the future. The company reported $23.3 billion in revenue for 2024, with core operating earnings of $1.1 billion, representing 4.7% of net sales. Adjusted earnings per share increased by 5% to $12.62, attributed to share repurchase programs and higher earnings. Operating cash flow and free cash flow were $1.1 billion and $561 million, respectively. Lear exceeded its $325 million share repurchase target by repurchasing $400 million worth of shares. The company announced a reduction in global headcount by 15,000, surpassing targets in both the seating and E-Systems segments. Revenue growth outpaced the market by two percentage points, with E-Systems outperforming by six points. The introduction of "Idea by Lear" and strategic acquisitions in automation and digitization were noted as key initiatives. Lear also highlighted significant growth with Chinese OEMs, securing new contracts and expanding its market share. For 2025, Lear anticipates $75 million in cost savings from automation investments, growing to $150 million annually. The company aims to maintain capital expenditure below 3% of revenue and expects operational margins to improve, targeting a 5% run rate by the end of 2025.Lear Corporate Events
Executive/Board Changes
Lear Appoints Julian Blissett to Board of Directors
Positive
Feb 18, 2025
On February 14, 2025, Lear Corporation announced the appointment of Julian Blissett, former Executive Vice President and President of GM China, to its Board of Directors. Mr. Blissett brings extensive global experience, particularly from his tenure in China, which is expected to provide strategic and operational insights to Lear, aiding in its continued growth and success.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.