Lear (LEA) AI Stock Analysis

• Market Cap: $5.66B
• Dividend Yield: 2.84%
• Average Volume (3M): 653.80K
• Price to Earnings (P/E): 13.4
• Beta (1Y): 0.76
• 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: 741,341
• 30 Day Avg. Volume: 653,800
• 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: 1.43
• Enterprise Value/Revenue: 0.35
• Enterprise Value/Gross Profit: 4.77
• Enterprise Value/Ebitda: 5.88
• 1Y Price Target: $115.67
• Price Target Upside: 6.70% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 9
• EPS Forecast (FY): 12.21
• Revenue Forecast (FY): $22.98B

• Rating: 75 Outperform
• Price Target: $122.00 ▲(12.54% 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 (LEA) is a global leader in automotive seating and electrical systems, providing innovative products and solutions for the automotive industry. With a diverse portfolio, Lear operates through two primary segments: Seating and E-Systems. The Seating segment designs and manufactures automotive seating systems, including seat structures and mechanisms, while the E-Systems segment focuses on advanced electrical distribution systems and electronic components that enhance vehicle connectivity and safety.

How the Company Makes Money

Lear generates revenue through the sale of its seating and electrical systems to major automotive manufacturers worldwide. The company's revenue model is primarily based on long-term contracts with original equipment manufacturers (OEMs), which involves supplying components and systems as part of the vehicle production process. Key revenue streams include the sale of seating systems, electrical distribution systems, and related components. Partnerships with major automotive brands and a focus on innovation in areas such as electric vehicles and smart technology further contribute to Lear's earnings, allowing the company to capture a share of the growing market for advanced automotive features.

Lear Financial Statement Overview

Summary

Lear demonstrates robust financial performance with consistent revenue growth and stable profitability margins. The balance sheet is well-managed with moderate leverage, and cash flow generation is strong, although there is potential for better free cash flow conversion. The company is well-positioned in the auto parts industry, but should focus on enhancing operational efficiency and profitability to sustain growth.

Income Statement

Lear's income statement shows a solid performance with a consistent revenue growth trend, evidenced by an 8.4% increase in the TTM period. The gross profit margin remains stable around 7%, and the net profit margin has improved slightly to 2.05% in the TTM. However, the EBIT and EBITDA margins have slightly decreased, indicating some pressure on operational efficiency. Overall, the company demonstrates a strong revenue trajectory with room for improvement in operational margins.

Balance Sheet

The balance sheet reflects a moderate debt-to-equity ratio of 0.70 in the TTM, indicating a balanced approach to leveraging. Return on equity has slightly decreased to 9.91%, suggesting a need for improved profitability. The equity ratio remains healthy, showing a stable capital structure. While the company maintains a solid financial position, there is potential risk if leverage increases without corresponding growth in equity.

Cash Flow

Lear's cash flow statement indicates a positive free cash flow growth of 8.4% in the TTM, reflecting effective cash management. The operating cash flow to net income ratio is 1.68, suggesting strong cash generation relative to net income. However, the free cash flow to net income ratio has decreased slightly, indicating potential challenges in converting income into free cash flow. Overall, the cash flow position is stable, but there is room for improvement in free cash flow conversion.

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	1.38B	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: 108.41
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• 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 108.41 is above the 20-day moving average (MA) of 102.35, above the 50-day MA of 104.01, and above the 200-day MA of 95.66, indicating a bullish trend. The MACD of 1.54 indicates Negative momentum. The RSI at 64.04 is Neutral, neither overbought nor oversold. The STOCH value of 76.11 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	$5.66B	13.36	8.96%	2.84%	-1.90%	-13.86%
ALV	74 Outperform	$9.22B	12.54	31.09%	2.46%	0.84%	26.17%
BWA	72 Outperform	$9.60B	71.91	2.24%	1.11%	0.08%	-83.69%
VC	71 Outperform	$2.90B	9.55	23.16%	0.25%	-4.03%	-39.51%
LKQ	70 Neutral	$7.89B	11.45	10.87%	3.85%	-3.71%	-0.27%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
DAN	54 Neutral	$2.51B	48.64	-4.82%	1.87%	-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.