Lear Corporation Just Missed Earnings - But Analysts Have Updated Their Models

It's been a good week for Lear Corporation (NYSE:LEA) shareholders, because the company has just released its latest third-quarter results, and the shares gained 2.9% to US$105. It was not a great result overall. While revenues of US$5.7b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 10% to hit US$2.02 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

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After the latest results, the twelve analysts covering Lear are now predicting revenues of US$23.5b in 2026. If met, this would reflect an okay 2.2% improvement in revenue compared to the last 12 months. Per-share earnings are expected to shoot up 83% to US$15.64. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$23.4b and earnings per share (EPS) of US$14.64 in 2026. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

View our latest analysis for Lear

The consensus price target was unchanged at US$117, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Lear, with the most bullish analyst valuing it at US$136 and the most bearish at US$99.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Lear's revenue growth is expected to slow, with the forecast 1.7% annualised growth rate until the end of 2026 being well below the historical 6.4% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 17% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Lear.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Lear's earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Lear. Long-term earnings power is much more important than next year's profits. We have forecasts for Lear going out to 2027, and you can see them free on our platform here.

It is also worth noting that we have found 3 warning signs for Lear that you need to take into consideration.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.