Lear (LEA) AI Stock Analysis

• Market Cap: $5.59B
• Dividend Yield: 2.96%
• Average Volume (3M): 619.68K
• Price to Earnings (P/E): 13.2
• Beta (1Y): 0.72
• Revenue Growth: -1.90%
• EPS Growth: -13.86%
• Country: US
• Employees: 173,700
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Auto - Parts
• EPS (TTM): 2.79
• Shares Outstanding: 51,870,170
• 10 Day Avg. Volume: 574,344
• 30 Day Avg. Volume: 619,679
• PEG Ratio: -1.44
• Price to Book (P/B): 1.19
• Price to Sales (P/S): 0.23
• P/FCF Ratio: 9.47
• Enterprise Value/Market Cap: 1.45
• Enterprise Value/Revenue: 0.35
• Enterprise Value/Gross Profit: 4.77
• Enterprise Value/Ebitda: 5.83
• 1Y Price Target: $117.33
• Price Target Upside: 8.87% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 9
• EPS Forecast (FY): 12.13
• Revenue Forecast (FY): $23.03B

• Rating: 75 Outperform
• Price Target: $122.00 ▲(13.20% Upside)

Lear's overall stock score reflects strong financial performance and reasonable valuation, supported by positive technical indicators. The company's robust revenue growth and cash flow generation are significant strengths, though profitability margins and recent operational challenges pose risks. The stock's valuation and dividend yield provide additional support for its attractiveness.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong demand for Lear's products and enhances its market position, supporting long-term financial stability.

Cash Flow Generation

Robust cash flow generation enhances Lear's ability to invest in growth opportunities and maintain financial flexibility, supporting sustainable operations.

Strategic Partnerships

Strategic partnerships and business wins in E-Systems strengthen Lear's competitive edge and position it well in the evolving automotive technology landscape.

Negative Factors

Cybersecurity Incident Impact

The cybersecurity incident highlights potential vulnerabilities in Lear's operations, which could affect customer trust and future revenue stability.

Revenue Impact from JLR Disruption

Significant revenue loss from the JLR disruption underscores the risk of dependency on key customers and the impact of operational disruptions.

Challenges in E-Systems Segment

Declining sales in the E-Systems segment indicate challenges in adapting to market changes, potentially affecting Lear's growth in this critical area.

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 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 Financial Statement Overview

Summary

Lear exhibits strong revenue growth and cash flow generation, supported by a stable balance sheet. While profitability margins could be improved, the company's financial health is solid, with effective leverage management and a strong equity position.

Income Statement

Lear's income statement shows a strong revenue growth rate of 42% in the TTM, indicating robust sales performance. The gross profit margin is moderate at 7.39%, and the net profit margin is relatively low at 1.92%, suggesting room for improvement in cost management. EBIT and EBITDA margins are stable, reflecting consistent operational efficiency.

Balance Sheet

The balance sheet reveals a manageable debt-to-equity ratio of 0.69, indicating a balanced approach to leveraging. Return on equity is decent at 9.17%, showing effective use of equity to generate profits. The equity ratio stands at 33.68%, highlighting a solid equity base relative to total assets.

Cash Flow

Cash flow analysis indicates a strong free cash flow growth rate of 53.63% in the TTM, demonstrating improved cash generation capabilities. The operating cash flow to net income ratio is healthy, suggesting good cash conversion from profits. The free cash flow to net income ratio of 56.80% further supports the company's ability to generate cash relative to its earnings.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	22.98B	23.30B	23.46B	20.88B	19.26B	17.04B
Gross Profit	1.70B	1.84B	1.75B	1.57B	1.49B	1.31B
EBITDA	1.39B	1.46B	1.48B	1.18B	1.25B	936.40M
Net Income	442.20M	506.60M	572.50M	327.70M	373.90M	158.50M
Balance Sheet
Total Assets	15.16B	14.03B	14.70B	13.76B	13.35B	13.20B
Cash, Cash Equivalents and Short-Term Investments	1.02B	1.06B	1.20B	1.12B	1.32B	1.32B
Total Debt	3.55B	3.50B	3.55B	3.34B	3.25B	2.87B
Total Liabilities	9.92B	9.43B	9.63B	8.93B	8.54B	8.58B
Stockholders Equity	5.11B	4.45B	4.92B	4.68B	4.64B	4.47B
Cash Flow
Free Cash Flow	734.80M	561.40M	622.80M	383.20M	85.00M	210.80M
Operating Cash Flow	1.29B	1.12B	1.25B	1.02B	670.10M	663.10M
Investing Cash Flow	-500.70M	-543.00M	-761.50M	-830.30M	-646.70M	-468.80M
Financing Cash Flow	-536.40M	-693.90M	-419.50M	-387.30M	-13.60M	-411.70M

Lear Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 107.77
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

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 107.77 is above the 20-day moving average (MA) of 106.16, above the 50-day MA of 103.25, and above the 200-day MA of 96.57, indicating a bullish trend. The MACD of 0.52 indicates Positive momentum. The RSI at 56.40 is Neutral, neither overbought nor oversold. The STOCH value of 71.04 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LEA.

Lear Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LEA	75 Outperform	$5.59B	13.19	8.96%	2.96%	-1.90%	-13.86%
ALV	74 Outperform	$8.98B	12.22	31.09%	2.64%	0.84%	26.17%
BWA	72 Outperform	$9.19B	68.84	2.24%	1.10%	0.08%	-83.69%
VC	71 Outperform	$2.81B	9.26	23.16%	0.53%	-4.03%	-39.51%
LKQ	70 Neutral	$7.57B	10.98	10.87%	4.06%	-3.71%	-0.27%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
DAN	54 Neutral	$2.63B	50.88	-4.82%	1.78%	-18.23%	―

Lear Corporate Events

Lear Corp’s Resilient Earnings Amidst Challenges

Lear Corporation’s recent earnings call painted a picture of resilience amid challenges, with a mixed sentiment overall. The company showcased strong revenue growth and high operating cash flow while navigating hurdles such as a cybersecurity incident affecting a key customer and declines in its E-Systems segment. Lear’s proactive strategies, including share repurchases and strategic partnerships, underscore its forward momentum.