Lear (LEA) AI Stock Analysis

• Market Cap: $4.53B
• Dividend Yield: 3.64%
• Average Volume (3M): 808.18K
• Price to Earnings (P/E): 9.4
• Beta (1Y): 0.68
• Revenue Growth: -0.70%
• EPS Growth: -7.27%
• Country: US
• Employees: 173,700
• Sector: Consumer Cyclical
• Sector Strength: 66
• Industry: Auto - Parts
• EPS (TTM): 8.94
• Shares Outstanding: 53,540,554
• 10 Day Avg. Volume: 614,374
• 30 Day Avg. Volume: 808,178
• PEG Ratio: 19.67
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.72
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 4.74
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $101.91
• Price Target Upside: 18.85% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 11

Lear Corporation's overall stock score reflects a blend of solid financial stability, attractive valuation, and strategic growth initiatives. However, the current bearish technical indicators and mixed earnings call sentiment, with pressures on sales and margins, weigh on the score. The appointment of a seasoned board member is a positive step, potentially aiding strategic growth, particularly in the Chinese market.

Positive Factors

Cost Efficiency

New program profitability for seating sees 200bps to 500bps cost saving improvement.

Financial Performance

Lear reported better than expected results, exceeding expectations for adjusted EBITDA and Net Income.

Negative Factors

Market Environment

With macro likely to remain choppy, and with a lack of a near-term catalyst, depressed valuation is not a sufficient reason to be bullish on the stock.

Revenue Guidance

2025 revenue guidance was below expectations, despite profitability outlook being better than expected.

Visibility and Forecasting

Reduced visibility to 2027 volumes due to evolving customer production plans lead management to only provide a two-year sales backlog outlook.

Lear Business Overview & Revenue Model

Company Description

Lear Corporation designs, develops, engineers, manufactures, assembles, and supplies automotive seating, and electrical distribution systems and related components for automotive original equipment manufacturers in North America, Europe, Africa, Asia, and South America. Its Seating segment offers seat systems, seat subsystems, keyseat components, seat trim covers, seat mechanisms, seat foams, and headrests, as well as surface materials, such as leather and fabric for automobiles and light trucks, compact cars, pick-up trucks, and sport utility vehicles. The company's E-Systems segment provides electrical distribution and connection systems that route electrical signals and networks; and manage electrical power within the vehicle for various powertrains. This segment's products comprise wire harnesses, terminals and connectors, engineered components, and junction boxes; electronic system products, including body domain control modules, smart and passive junction boxes, gateway and communication modules, integrated power modules, and high voltage switching and power control systems. It also offers software and connected services comprising Xevo Market, an in-vehicle commerce and service platform; and software and services for the cloud, vehicles, and mobile devices. In addition, this segment provides cybersecurity software; advanced vehicle positioning for automated and autonomous driving applications; and short-range communication and cellular protocols for vehicle connectivity. It offers its products and services under the XEVO, GUILFORD, EAGLE OTTAWA, ConfigurE+, INTUTM, LEAR CONNEXUSTM, EXO, JOURNEYWARE, ProTec, SMART JUNCTION BOX, STRUCSURE, AVENTINO, and TeXstyle brands. Lear Corporation was founded in 1917 and is headquartered in Southfield, Michigan.

How the Company Makes Money

Lear 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 demonstrates a solid financial position with strengths in revenue generation and equity management. However, profitability margins have been under pressure, and cash flow variability indicates potential challenges in capital management. The company is well-positioned in terms of leverage but needs to focus on stabilizing profit margins and enhancing cash flow consistency for stronger financial health.

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.

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.

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.

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

• Technical Analysis Sentiment: Neutral
• Last Price: 85.75
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LEA, the sentiment is Neutral. The current price of 85.75 is above the 20-day moving average (MA) of 81.35, below the 50-day MA of 89.41, and below the 200-day MA of 99.00, indicating a neutral trend. The MACD of -1.39 indicates Negative momentum. The RSI at 54.56 is Neutral, neither overbought nor oversold. The STOCH value of 85.71 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for LEA.

Lear Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VC	77 Outperform	$1.84B	6.94	25.15%	―	-1.35%	-39.06%
ALV	74 Outperform	$6.21B	9.98	28.71%	3.03%	-2.29%	35.00%
LEA	69 Neutral	$4.53B	9.44	10.81%	3.64%	-0.70%	-7.27%
APTV	69 Neutral	$11.00B	6.97	17.57%	―	-1.69%	-33.56%
GNTX	66 Neutral	$4.82B	12.08	15.95%	2.18%	-1.66%	-9.20%
BWA	65 Neutral	$5.75B	17.42	6.46%	1.52%	-11.11%	-46.32%
Sector *	60 Neutral	$6.58B	11.55	3.14%	4.05%	2.58%	-21.37%

Lear Corporate Events

Lear Appoints Julian Blissett to Board of Directors

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.