Lear Corporation Just Missed EPS By 11%: Here's What Analysts Think Will Happen Next

Shareholders might have noticed that Lear Corporation (NYSE:LEA) filed its full-year result this time last week. The early response was not positive, with shares down 2.3% to US$133 in the past week. It was not a great result overall. While revenues of US$23b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 11% to hit US$9.68 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Lear

Taking into account the latest results, the most recent consensus for Lear from 15 analysts is for revenues of US$24.4b in 2024. If met, it would imply a modest 4.0% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to bounce 38% to US$13.55. Before this earnings report, the analysts had been forecasting revenues of US$24.4b and earnings per share (EPS) of US$15.63 in 2024. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$162, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Lear at US$220 per share, while the most bearish prices it at US$134. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting Lear's growth to accelerate, with the forecast 4.0% annualised growth to the end of 2024 ranking favourably alongside historical growth of 3.0% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 11% per year. So it's clear that despite the acceleration in growth, Lear is expected to grow meaningfully slower than the industry average.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Lear going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for Lear you should be aware of.

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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.