Lear (NYSE:LEA) - Share price, News & Analysis

LEA fundamental analysis
Snowflake Score
Valuation	3/6
Future Growth	4/6
Past Performance	0/6
Financial Health	6/6
Dividends	3/6

LEA Stock Overview

Rewards

Trading at 57.6% below our estimate of its fair value

Earnings are forecast to grow 44.2% per year

Risk Analysis

Dividend of 2.32% is not well covered by earnings

Large one-off items impacting financial results

Lear Competitors

Aptiv

NYSE:APTV

US$25.4b

BorgWarner

NYSE:BWA

US$9.1b

Autoliv

NYSE:ALV

US$6.7b

Dorman Products

NasdaqGS:DORM

US$3.0b

Price History & Performance

Summary of all time highs, changes and price drops for Lear
Historical stock prices
Current Share Price	US$132.76
52 Week High	US$204.91
52 Week Low	US$122.67
Beta	1.48
1 Month Change	-0.98%
3 Month Change	-22.71%
1 Year Change	-29.49%
3 Year Change	5.49%
5 Year Change	-10.04%
Change since IPO	372.04%

Recent News & Updates

May 20

Lear - Fasten Your Seatbelts

Lear has been hurt by the pandemic, chip shortages and now a softer economy and inflationary pressures. The company has been underperforming for a while, as the recent pullback in the shares seems perfectly explainable. I am not actively considering Lear shares here even as it is making bolt-on deals to diversify from the core seating business.

May 18

There Are Reasons To Feel Uneasy About Lear's (NYSE:LEA) Returns On Capital

If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an...

Shareholder Returns

	LEA	US Auto Components	US Market
7D	0.09%	-2.6%	-2.7%
1Y	-29.5%	-34.2%	-12.9%

Return vs Industry: LEA exceeded the US Auto Components industry which returned -34.2% over the past year.

Return vs Market: LEA underperformed the US Market which returned -12.9% over the past year.

Price Volatility

Is LEA's price volatile compared to industry and market?
LEA volatility
LEA Average Weekly Movement	7.5%
Auto Components Industry Average Movement	8.7%
Market Average Movement	7.8%
10% most volatile stocks in US Market	16.8%
10% least volatile stocks in US Market	2.9%

Stable Share Price: LEA is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: LEA's weekly volatility (7%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1917	160,100	Ray Scott	https://www.lear.com

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.

Lear Fundamentals Summary

How do Lear's earnings and revenue compare to its market cap?
LEA fundamental statistics
Market Cap	US$7.94b
Earnings (TTM)	US$219.60m
Revenue (TTM)	US$19.12b

36.1x

P/E Ratio

0.4x

P/S Ratio

Is LEA overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
LEA income statement (TTM)
Revenue	US$19.12b
Cost of Revenue	US$17.78b
Gross Profit	US$1.33b
Other Expenses	US$1.11b
Earnings	US$219.60m

Last Reported Earnings

Apr 02, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	3.67
Gross Margin	6.97%
Net Profit Margin	1.15%
Debt/Equity Ratio	53.8%

How did LEA perform over the long term?

See historical performance and comparison

Dividends

2.3%

Current Dividend Yield

63%

Payout Ratio

Valuation

Is Lear undervalued compared to its fair value and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

Below Fair Value
Significantly Below Fair Value
PE vs Industry
PE vs Market
PEG Ratio
PB vs Industry

>50%

Undervalued compared to fair value

Share Price vs. Fair Value

Below Fair Value: LEA ($132.76) is trading below our estimate of fair value ($313.28)

Significantly Below Fair Value: LEA is trading below fair value by more than 20%.

Price To Earnings Ratio

PE vs Industry: LEA is poor value based on its PE Ratio (36.1x) compared to the US Auto Components industry average (14.5x).

PE vs Market: LEA is poor value based on its PE Ratio (36.1x) compared to the US market (15.3x).

Price to Earnings Growth Ratio

PEG Ratio: LEA is good value based on its PEG Ratio (0.8x)

Price to Book Ratio

PB vs Industry: LEA is overvalued based on its PB Ratio (1.7x) compared to the US Auto Components industry average (1.6x).

Future Growth

How is Lear forecast to perform in the next 1 to 3 years based on estimates from 18 analysts?

Future Growth Score

4/6

Future Growth Score 4/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

44.2%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: LEA's forecast earnings growth (44.2% per year) is above the savings rate (1.9%).

Earnings vs Market: LEA's earnings (44.2% per year) are forecast to grow faster than the US market (12.5% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: LEA's revenue (8.7% per year) is forecast to grow faster than the US market (7.8% per year).

High Growth Revenue: LEA's revenue (8.7% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: LEA's Return on Equity is forecast to be low in 3 years time (18.9%).

Past Performance

How has Lear performed over the past 5 years?

Past Performance Score

0/6

Past Performance Score 0/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-28.8%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: LEA has a large one-off loss of $138.6M impacting its April 2 2022 financial results.

Growing Profit Margin: LEA's current net profit margins (1.1%) are lower than last year (1.6%).

Past Earnings Growth Analysis

Earnings Trend: LEA's earnings have declined by 28.8% per year over the past 5 years.

Accelerating Growth: LEA's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: LEA had negative earnings growth (-22.8%) over the past year, making it difficult to compare to the Auto Components industry average (24.5%).

Return on Equity

High ROE: LEA's Return on Equity (6.3%) is considered low.

Financial Health

How is Lear's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: LEA's short term assets ($6.9B) exceed its short term liabilities ($5.1B).

Long Term Liabilities: LEA's short term assets ($6.9B) exceed its long term liabilities ($3.8B).

Debt to Equity History and Analysis

Debt Level: LEA's net debt to equity ratio (29.7%) is considered satisfactory.

Reducing Debt: LEA's debt to equity ratio has reduced from 55.8% to 53.8% over the past 5 years.

Debt Coverage: LEA's debt is well covered by operating cash flow (24.8%).

Interest Coverage: LEA's interest payments on its debt are well covered by EBIT (6.9x coverage).

Balance Sheet

Dividend

What is Lear current dividend yield, its reliability and sustainability?

Dividend Score

4/6

Dividend Score 4/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

2.32%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: LEA's dividend (2.32%) is higher than the bottom 25% of dividend payers in the US market (1.58%).

High Dividend: LEA's dividend (2.32%) is low compared to the top 25% of dividend payers in the US market (4.11%).

Stability and Growth of Payments

Stable Dividend: LEA's dividend payments have been volatile in the past 10 years.

Growing Dividend: LEA's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonable payout ratio (62.6%), LEA's dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its high cash payout ratio (451.3%), LEA's dividend payments are not well covered by cash flows.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

4.0yrs

Average management tenure

CEO

Ray Scott (56 yo)

4.17yrs

Tenure

US$13,306,375

Compensation

Mr. Raymond E. Scott Jr., also known as Ray, serves as President, Chief Executive Officer and Director at Lear Corporation since May 1, 2018 and had been its Interim President of E-Systems since January 28...

CEO Compensation Analysis

Compensation vs Market: Ray's total compensation ($USD13.31M) is above average for companies of similar size in the US market ($USD8.23M).

Compensation vs Earnings: Ray's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: LEA's management team is considered experienced (4 years average tenure).

Board Members

Experienced Board: LEA's board of directors are considered experienced (5.2 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/05/21 00:00
End of Day Share Price	2022/05/20 00:00
Earnings	2022/04/02
Annual Earnings	2021/12/31