NYSE:LEA

Stock Analysis Report

Executive Summary

Lear Corporation designs, develops, engineers, manufactures, assembles, and supplies automotive seating, and electrical distribution systems and related components for automotive original equipment manufacturers worldwide.

Rewards

Trading at 35.9% below its fair value

Earnings are forecast to grow 8.7% per year

Risk Analysis

Has a high level of debt

Unstable dividend track record



Snowflake Analysis

Good value with adequate balance sheet.


Similar Companies

Share Price & News

How has Lear's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: LEA has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

3.5%

LEA

0.8%

US Auto Components

-0.3%

US Market


1 Year Return

-2.4%

LEA

9.6%

US Auto Components

18.6%

US Market

Return vs Industry: LEA underperformed the US Auto Components industry which returned 9.6% over the past year.

Return vs Market: LEA underperformed the US Market which returned 18.6% over the past year.


Shareholder returns

LEAIndustryMarket
7 Day3.5%0.8%-0.3%
30 Day-3.8%-2.7%2.2%
90 Day3.5%9.3%5.6%
1 Year-0.7%-2.4%11.2%9.6%21.1%18.6%
3 Year-6.0%-10.3%1.1%-9.1%45.6%36.2%
5 Year47.7%38.2%22.1%4.7%71.1%52.2%

Price Volatility Vs. Market

How volatile is Lear's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

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

35.9%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: LEA ($124.49) is trading below our estimate of fair value ($194.14)

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


Price To Earnings Ratio

PE vs Industry: LEA is good value based on its PE Ratio (9.1x) compared to the Auto Components industry average (17.1x).

PE vs Market: LEA is good value based on its PE Ratio (9.1x) compared to the US market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: LEA is poor value based on its PEG Ratio (1x)


Price to Book Ratio

PB vs Industry: LEA is overvalued based on its PB Ratio (1.8x) compared to the US Auto Components industry average (1.2x).


Next Steps

Future Growth

How is Lear forecast to perform in the next 1 to 3 years based on estimates from 16 analysts?

8.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: LEA's forecast earnings growth (8.7% per year) is above the savings rate (1.7%).

Earnings vs Market: LEA's earnings (8.7% per year) are forecast to grow slower than the US market (14.2% per year).

High Growth Earnings: LEA's earnings are forecast to grow, but not significantly.

Revenue vs Market: LEA's revenue (3.1% per year) is forecast to grow slower than the US market (7.4% per year).

High Growth Revenue: LEA's revenue (3.1% 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 high in 3 years time (20.2%)


Next Steps

Past Performance

How has Lear performed over the past 5 years?

11.2%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: LEA has high quality earnings.

Growing Profit Margin: LEA's current net profit margins (4.3%) are lower than last year (6.1%).


Past Earnings Growth Analysis

Earnings Trend: LEA's earnings have grown by 11.2% 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 (-35.1%) over the past year, making it difficult to compare to the Auto Components industry average (4.1%).


Return on Equity

High ROE: LEA's Return on Equity (20.6%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Lear's financial position?


Financial Position Analysis

Short Term Liabilities: LEA's short term assets ($6.6B) exceed its short term liabilities ($4.9B).

Long Term Liabilities: LEA's short term assets ($6.6B) exceed its long term liabilities ($3.3B).


Debt to Equity History and Analysis

Debt Level: LEA's debt to equity ratio (51.6%) is considered high.

Reducing Debt: LEA's debt to equity ratio has increased from 34.3% to 51.6% over the past 5 years.

Debt Coverage: LEA's debt is well covered by operating cash flow (66.7%).

Interest Coverage: LEA's interest payments on its debt are well covered by EBIT (16.2x coverage).


Balance Sheet

Inventory Level: LEA has a high level of physical assets or inventory.

Debt Coverage by Assets: LEA's debt is covered by short term assets (assets are 2.8x debt).


Next Steps

Dividend

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

2.41%

Current Dividend Yield


Dividend Yield vs Market

company2.4%marketbottom25%1.4%markettop25%3.7%industryaverage1.8%forecastin3Years2.4%

Current dividend yield vs market & industry

Notable Dividend: LEA's dividend (2.41%) is higher than the bottom 25% of dividend payers in the US market (1.42%).

High Dividend: LEA's dividend (2.41%) is low compared to the top 25% of dividend payers in the US market (3.7%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, LEA has been paying a dividend for less than 10 years.

Growing Dividend: LEA's dividend payments have increased, but the company has only paid a dividend for 9 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (21.6%), LEA's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: LEA's dividends in 3 years are forecast to be well covered by earnings (17.1% payout ratio).


Next Steps

Management

What is the CEO of Lear's salary, the management and board of directors tenure and is there insider trading?

1.1yrs

Average management tenure


CEO

Ray Scott (54yo)

1.8yrs

Tenure

US$9,936,305

Compensation

Mr. Raymond E. Scott Jr., also known as Ray, serves as President, Chief Executive Officer and Director at Lear Corporation since 2019 and had been its Interim President of E-Systems since February 2019 unt ...


CEO Compensation Analysis

Compensation vs Market: Ray's total compensation ($USD9.94M) is above average for companies of similar size in the US market ($USD6.81M).

Compensation vs Earnings: Ray's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Management Age and Tenure

1.1yrs

Average Tenure

51yo

Average Age

Experienced Management: LEA's management team is not considered experienced ( 1.1 years average tenure), which suggests a new team.


Board Age and Tenure

9.3yrs

Average Tenure

65yo

Average Age

Experienced Board: LEA's board of directors are considered experienced (9.3 years average tenure).


Insider Trading

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


Recent Insider Transactions

SellUS$546,00020 Feb 19
Shari Burgess
EntityIndividual
Shares3,500
Max PriceUS$156.00
SellUS$2,947,89615 Feb 19
Terrence Larkin
EntityIndividual
Role
Senior Key Executive
Shares18,985
Max PriceUS$155.28

Ownership Breakdown

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


Management Team

  • Ray Scott (54yo)

    President

    • Tenure: 1.8yrs
    • Compensation: US$9.94m
  • Jeff Vanneste (59yo)

    • Tenure: 0.08yrs
    • Compensation: US$4.36m
  • Frank Orsini (46yo)

    Executive VP & President of Seating

    • Tenure: 7.3yrs
    • Compensation: US$4.16m
  • Terry Larkin (64yo)

    • Tenure: 0.3yrs
    • Compensation: US$4.20m
  • Tom DiDonato (60yo)

    Senior VP & Chief Administrative Officer

    • Tenure: 0.9yrs
    • Compensation: US$3.47m
  • Jason Cardew (49yo)

    Senior VP & CFO

    • Tenure: 0.08yrs
    • Compensation: US$1.52m
  • Amy Doyle (51yo)

    VP & Chief Accounting Officer

    • Tenure: 2.6yrs
  • John Absmeier (44yo)

    Chief Technology Officer

    • Tenure: 1.5yrs
  • Alicia Davis

    Senior Vice President of Corporate Development & Investor Relations

    • Tenure: 1.3yrs
  • Harry Kemp (43yo)

    Senior VP

    • Tenure: 0.3yrs

Board Members

  • Henry Daniel Wallace (73yo)

    Non-Executive Chairman

    • Tenure: 9.3yrs
    • Compensation: US$474.80k
  • Thomas Capo (68yo)

    Independent Director

    • Tenure: 10.1yrs
    • Compensation: US$294.97k
  • Jon Foster (58yo)

    Independent Director

    • Tenure: 10.1yrs
    • Compensation: US$655.49k
  • Kathleen Ligocki (63yo)

    Independent Director

    • Tenure: 7.3yrs
    • Compensation: US$289.97k
  • Greg Smith (67yo)

    Independent Director

    • Tenure: 10.1yrs
    • Compensation: US$274.97k
  • Ray Scott (54yo)

    President

    • Tenure: 1.8yrs
    • Compensation: US$9.94m
  • Conrad Mallett (65yo)

    Independent Director

    • Tenure: 17.3yrs
    • Compensation: US$274.97k
  • Mei-Wei Cheng (69yo)

    Director

    • Tenure: 0.9yrs
  • Mary Jepsen (54yo)

    Independent Director

    • Tenure: 3.8yrs
    • Compensation: US$274.97k

Company Information

Lear Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Lear Corporation
  • Ticker: LEA
  • Exchange: NYSE
  • Founded: 1917
  • Industry: Auto Parts and Equipment
  • Sector: Automobiles
  • Market Cap: US$7.201b
  • Shares outstanding: 60.47m
  • Website: https://www.lear.com

Number of Employees


Location

  • Lear Corporation
  • 21557 Telegraph Road
  • Southfield
  • Michigan
  • 48033
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
LEANYSE (New York Stock Exchange)YesCommon StockUSUSDNov 2009
LE6NDB (Deutsche Boerse AG)YesCommon StockDEEURNov 2009
LEA *BMV (Bolsa Mexicana de Valores)YesCommon StockMXMXNNov 2009
0JTQLSE (London Stock Exchange)YesCommon StockGBUSDNov 2009

Biography

Lear Corporation designs, develops, engineers, manufactures, assembles, and supplies automotive seating, and electrical distribution systems and related components for automotive original equipment manufac ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/07 00:20
End of Day Share Price2019/12/06 00:00
Earnings2019/09/28
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.