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Lear Corp (LEA)
NYSE:LEA
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Lear
(NYSE:LEA)
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Rating:72Outperform
Price Target:
$152.00
▲(14.41% Upside)
Action:ReiteratedDate:02/14/26
The score is driven primarily by healthy (though recently softening) financial performance and improving balance-sheet leverage, alongside a strong technical uptrend with positive momentum. Moderating factors are the 2025 margin/FCF step-down and only average valuation support, while the earnings call was net positive due to improving 2026 profitability/cash guidance tempered by production and mix headwinds plus restructuring costs.
Positive Factors
Cash generation & liquidity
Consistent operating cash flow (~$1.1B) and positive free cash flow provide durable funding for capital spending, automation investments and $300M+ targeted buybacks. Strong liquidity (~$3B) and a stated >80% FCF conversion objective support strategic flexibility across 2–3 year horizons.
Improving leverage
A meaningful decline in debt-to-equity enhances balance sheet resilience and optionality. Lower leverage reduces interest sensitivity, supports continued capex (~$660M guidance) and buybacks, and gives management room to fund restructuring and automation without compromising liquidity or credit profile over the medium term.
Material new business wins
Large multi-year program awards drive durable revenue and higher content-per-vehicle over several model cycles. Securing the largest seating conquest plus >$1.4B in E-Systems awards provides multi-year visibility, helps smooth cyclical OEM volumes and enhances scale and negotiating leverage with customers and suppliers.
Negative Factors
Margin compression
Declining gross and net margins signal structural pressure from mix, commodity and launch inefficiencies. Thinner margins reduce incremental cash generation and constrain reinvestment capacity, making profitability more sensitive to volume swings and limiting room to absorb future commodity or labor cost increases.
E-Systems sales & margin pressure
E-Systems faces structural headwinds from lower EV platform volumes and program roll-offs, reducing content revenues and margin contribution. As a sizable portfolio component, persistent weakness here lowers company-wide margin resilience and increases reliance on Seating and new awards to restore overall profitability.
Volume/mix and production headwinds
Large volume/mix drags and an assumed modest industry production decline create enduring revenue and cash visibility risks. OEM program timing, roll-offs and model changeovers can depress utilization and amplify working capital swings, limiting sustainable free cash flow and complicating medium-term planning.
Lear (LEA) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.94B
Dividend Yield2.63%
Average Volume (3M)564.26K
Price to Earnings (P/E)16.8
Beta (1Y)0.69
Revenue Growth-1.90%
EPS Growth-13.86%
CountryUS
Employees173,700
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Parts
Share Statistics
EPS (TTM)3.41
Shares Outstanding50,727,455
10 Day Avg. Volume502,420
30 Day Avg. Volume564,257
Financial Highlights & Ratios
PEG Ratio-1.46
Price to Book (P/B)1.22
Price to Sales (P/S)0.26
P/FCF Ratio11.65
Enterprise Value/Market Cap1.46
Enterprise Value/Revenue0.44
Enterprise Value/Gross Profit6.22
Enterprise Value/Ebitda8.65
Forecast
1Y Price Target
$143.78Price Target Upside8.22% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering10
EPS Forecast (FY)14.47
Revenue Forecast (FY)$23.69B
Lear Business Overview & Revenue Model
Company DescriptionLear 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 MoneyLear Corporation generates revenue primarily through the sale of its seating and electrical products to automotive manufacturers. The company's revenue model is largely based on long-term contracts with major automakers, which provide a stable source of income. Key revenue streams include the production and supply of complete seat systems, seat components, and electrical systems that facilitate vehicle connectivity and efficiency. Additionally, Lear benefits from partnerships with leading automotive brands, allowing it to leverage collaborative innovation and access to new markets. Factors contributing to its earnings include demand for electric vehicles and advancements in automotive technology, which drive the need for Lear's specialized products.
Lear Key Performance Indicators (KPIs)
Lear Earnings Call Summary
Earnings Call Date:Feb 04, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 05, 2026
Earnings Call Sentiment Positive
The call presents a predominantly positive operational and strategic update: strong cash generation, record net performance ($195M), major new business awards (including the largest-ever seating conquest with GM), robust automation and digital initiatives, and aggressive capital return to shareholders. Offsetting items include volume and mix headwinds (notably in E-Systems and certain Seating programs), industry production pressure, one-time restructuring costs in 2026, and timing delays for some thermal comfort targets. Management expects margin improvement and continued net-performance gains in 2026, but near-term growth is tempered by program roll-offs and production changeovers.Q4-2025 Updates
Positive Updates
Full-Year Revenue and Core Earnings
Full-year revenue of $23.3 billion with core operating earnings of $1.1 billion (4.6% of net sales). Adjusted EPS for the full year was $12.80, a 1% increase versus 2024 (fifth consecutive year-over-year increase).
Quarterly Growth and EPS Momentum
Fourth-quarter sales increased 5% year-over-year; Q4 adjusted EPS was $3.41 versus $2.94 a year ago (≈16% increase), driven by share repurchases and a lower tax rate.
Strong Cash Generation and Share Returns
Operating cash flow of ~$1.1 billion and free cash flow of $527 million for 2025. Repurchased $325 million of shares (exceeding $250M target) and returned nearly $500 million to shareholders including dividends; targeting >80% free cash flow conversion and $300M+ share repurchases in 2026.
Record Net Performance / Operational Savings
Delivered record net performance savings of $195 million in 2025 (56% above original $125M target), contributing ~60 bps to Seating and ~110 bps to E-Systems margins. Idea by Lear initiatives generated $70 million and restructuring delivered $85 million in savings for the year.
Significant New Business Awards
Largest seating conquest award in Lear history: complete seats for GM full-size SUVs and pickup trucks at Orion (launch targeted 2027). E-Systems secured >$1.4 billion in business awards in 2025 (strongest performance in over a decade).
Thermal Comfort Leadership and Pipeline
Secured 33 thermal comfort awards expected to generate ≈$170 million average annual revenue at peak; nine programs already in production and 14 additional launches secured for 2026. Vertical integration (Kongsberg and IGB acquisitions) positions Lear as a unique full-solution supplier.
Digital & Automation Progress
Palantir Foundry reached >17,000 users and 300+ custom apps. Cycle-time deviation tool delivered 3–5% efficiency gains (≈$10M savings in 2025; expected $15M in 2026). Tariff-tracking solution recovered nearly 100% of tariff costs.
Backlog and Future Growth Visibility
Two-year sales backlog of $1.325 billion with $725 million expected net new business in 2027 (≈$465M Seating, $260M E-Systems). At midpoint, 2026 revenue guidance $23.2–$24.0B (≈+2% YoY) and core operating earnings guided to $1.03–$1.2B (midpoint ≈+5% YoY).
Negative Updates
E-Systems Sales and Margin Pressure
Full-year E-Systems sales declined 2% to $6.0 billion (ex-FX/other down ~5%). Adjusted earnings decreased to $293 million (4.9% of sales) from $310 million (5.1% in 2024), reflecting lower volumes on GM EV platforms, Ford Escape/Corsair wind-down and discontinued product lines.
Seating Volume and Mix Headwinds
Seating full-year sales essentially flat at $17.3 billion (+0.4% YoY) and adjusted earnings down 1% due to lower volumes and unfavorable program mix (notably several JLR and Mercedes programs), partially offset by net performance.
Volume/Mix Drag Across the Company
Management cited roughly an $800 million drag from volume/mix this year driven by GM EV volume reductions, program changeovers, and lower volumes with certain European and legacy platforms; E-Systems faces a ~ $140 million headwind in 2026 from specific roll-offs.
Industry & Production Assumptions Weakness
2026 guidance assumes global industry production down ~1% on a Lear sales-weighted basis; Q4 production trends showed flat North America, -2% Europe, +3% China—signaling potential near-term headwinds to volume-driven growth.
Timing and Delays for Thermal Comfort Targets
While the $1 billion thermal comfort revenue target and 10% EBIT goal remain, management indicated timing has been pushed out (original 01/2027 target delayed), so milestone timing is uncertain.
Working Capital and Cash Flow Timing Variability
Fourth-quarter operating cash flow was $476 million versus $681 million a year ago due primarily to working capital timing, indicating quarter-to-quarter cash flow variability.
Restructuring and Footprint Costs
2026 outlook includes approximately $175 million of restructuring costs to support footprint rationalization and automation investments, which will weigh on near-term earnings.
Headcount & JV Consolidation Effects
Consolidation of two Chinese joint ventures and production schedule changes led to slightly higher hourly headcount than projected in 2025, despite a reduction of 7,000 hourly roles in the year and 22,000 over two years.
Company Guidance
Lear guided 2026 revenue of $23.2–$24.0 billion (midpoint +$351 million, ~+2% vs. 2025; ex-FX/commodities/etc. -1%), core operating earnings of $1.03–$1.20 billion (midpoint ≈+5% YoY), adjusted net income of about $645–$765 million, and company adjusted margins up ~10 bps (Seating ~6.5%, E‑Systems ~5.0%); they expect net performance to contribute ~40 bps in Seating and ~80 bps in E‑Systems, assume global production down ~1% (Lear sales‑weighted), EUR ≈ $1.026 and RMB ≈ 7.1, and plan ~$175 million of restructuring, ~$660 million of capital spending, $1.2–$1.3 billion of operating cash flow, and roughly $600 million of free cash flow at the midpoint with >80% conversion, funding targeted share repurchases of at least $300 million (≈$775 million authorization remaining), while maintaining ~ $3 billion of liquidity and cost of debt <4%; backlog metrics include a two‑year backlog of $1.325 billion, ~$60 million of net new business in 2026, and ~$725 million in 2027 (Seating ~$465M, E‑Systems ~$260M).Lear Financial Statement Overview
Summary
Financials are solid but softened in 2025: revenue held near ~$23B, leverage improved (debt-to-equity down to ~0.53), and operating/free cash flow remained positive. Offsetting this, margins compressed in 2025 (gross and net), ROE stepped down, and free cash flow fell sharply with weaker cash conversion.Income Statement
Revenue has been fairly stable at ~$23B over the last three years (2023–2025), with only modest growth and a slight decline in 2024. Profitability is positive but thin for the industry: 2025 gross margin (~6.5%) and net margin (~1.9%) are down versus 2023–2024, and operating profitability also stepped down year over year. Net income remains solid in dollar terms, but the margin compression in 2025 is the key concern despite generally steady demand.70
Positive
Balance Sheet
Leverage looks manageable and improving: debt-to-equity declined to ~0.53 in 2025 from ~0.79 in 2024, supported by higher equity and lower debt. Returns on equity are decent (mid-to-high single digits in 2025, low double digits in 2023–2024), indicating the balance sheet is still producing reasonable shareholder returns. The main weakness is the step-down in return on equity in 2025 versus the prior two years, consistent with the profitability softening.74
Positive
Cash Flow
Operating cash flow remains strong (about $1.1B in 2025), and free cash flow stayed positive (~$527M). However, free cash flow declined sharply in 2025 (down ~28%), and free cash flow covers only about half of net income in 2025, pointing to less efficient cash conversion than ideal. Cash generation is still supportive overall, but the recent downshift and volatility versus prior years are the key negatives.63
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 23.26B | 23.30B | 23.46B | 20.88B | 19.26B |
| Gross Profit | 1.50B | 1.84B | 1.75B | 1.57B | 1.49B |
| EBITDA | 725.90M | 1.46B | 1.48B | 1.18B | 1.25B |
| Net Income | 436.80M | 506.60M | 572.50M | 327.70M | 373.90M |
Balance Sheet | |||||
| Total Assets | 14.84B | 14.03B | 14.70B | 13.76B | 13.35B |
| Cash, Cash Equivalents and Short-Term Investments | 1.04B | 1.06B | 1.20B | 1.12B | 1.32B |
| Total Debt | 4.10B | 4.08B | 3.55B | 3.34B | 3.25B |
| Total Liabilities | 9.64B | 9.43B | 9.63B | 8.93B | 8.54B |
| Stockholders Equity | 5.04B | 4.45B | 4.92B | 4.68B | 4.64B |
Cash Flow | |||||
| Free Cash Flow | 527.20M | 561.40M | 622.80M | 383.20M | 85.00M |
| Operating Cash Flow | 1.09B | 1.12B | 1.25B | 1.02B | 670.10M |
| Investing Cash Flow | -516.80M | -543.00M | -761.50M | -830.30M | -646.70M |
| Financing Cash Flow | -618.50M | -693.90M | -419.50M | -387.30M | -13.60M |
Lear Technical Analysis
Positive
132.86
Price Trends
123.77
Positive
113.52
Positive
105.73
Positive
Market Momentum
3.97
Positive
56.05
Neutral
18.44
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LEA, the sentiment is Positive. The current price of 132.86 is above the 20-day moving average (MA) of 130.57, above the 50-day MA of 123.77, and above the 200-day MA of 105.73, indicating a bullish trend. The MACD of 3.97 indicates Positive momentum. The RSI at 56.05 is Neutral, neither overbought nor oversold. The STOCH value of 18.44 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LEA.
Lear Risk Analysis
Lear disclosed 30 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | $6.94B | 16.80 | 9.21% | 2.63% | -1.90% | -13.86% | |
72 Outperform | $2.90B | 9.53 | 14.37% | 0.57% | -4.03% | -39.51% | |
71 Outperform | $9.51B | 13.09 | 30.32% | 2.60% | 0.84% | 26.17% | |
68 Neutral | $8.50B | 14.14 | 9.78% | 4.00% | -3.71% | -0.27% | |
62 Neutral | $12.78B | 48.22 | 5.05% | 1.24% | 0.08% | -83.69% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
53 Neutral | $4.06B | 78.70 | -4.82% | 1.70% | -18.23% | ― |
* Consumer Cyclical Sector Average
LEA
Lear
132.86
38.83
41.30%
ALV
Autoliv
121.75
26.30
27.55%
BWA
BorgWarner
58.17
28.87
98.53%
DAN
Dana Incorporated
34.84
19.83
132.11%
LKQ
LKQ
33.29
-6.58
-16.51%
VC
Visteon
95.07
7.39
8.43%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.