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Lear (LEA) Up 5.7% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Lear (LEA - Free Report) . Shares have added about 5.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Lear due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Lear Q4 Earnings Lag Estimates, Revenues Rise Y/Y
Lear reported fourth-quarter 2023 adjusted earnings of $3.03 per share, which increased from $2.81 recorded in the year-ago quarter. The bottom line however missed the Zacks Consensus Estimate of $3.07 per share.
In the reported quarter, revenues increased 9% year over year to $5.8 billion. The top line also beat the Zacks Consensus Estimate of $5.65 billion.
Segment Performance
Sales of the Seating segment totaled $4.34 billion in the reported quarter, reflecting a 7.4% increase from the year-ago quarter and surpassing the Zacks Consensus Estimate of $4.21 billion, thanks to solid backlog and acquisition benefits. Adjusted segment earnings came in at $293.8 million, up from $275.1 million recorded in the year-ago quarter. The segment recorded adjusted margins of 6.8% of sales, which is in line with the previous year's quarter.
Sales in the E-Systems segment were $1.5 billion, up 12.8% year over year and ahead of the Zacks Consensus Estimate of $1.43 billion on a solid backlog. Adjusted segmental earnings amounted to $84 million, up from $63.9 million in the corresponding quarter of 2022. For the E-Systems segment, the adjusted margin was 5.6% of sales, up from 4.8% in the year-ago quarter.
Performance by Region
Sales in the North America region increased 1.3% year over year to $2.27 billion in the quarter under review and exceeded the Zacks Consensus Estimate of $2.25 billion.
Sales in the Europe and Africa region grew 19.2% year over year to $2.17 billion in the quarter. The metric also topped the Zacks Consensus Estimate of $2.04 billion.
Sales in the Asia region totaled $1.17 billion in the quarter, rising 7.3% year over year and surpassing the Zacks Consensus Estimate of $1.16 billion.
Sales in the South America region rose 0.5% year over year to $221.4 million in the quarter, outpacing the Zacks Consensus Estimate of $208 million.
Financial Position
The company had $1.2 billion in cash and cash equivalents as of Dec 31, 2023 compared with $1.11 billion recorded as of Dec 31, 2022. Long-term debt was $2.74 billion as of Dec 31, 2023 compared with a debt of $2.59 billion recorded as of Dec 31, 2022.
During the quarter under discussion, net cash provided by operating activities totaled $569.7 million, an improvement from $537.2 million in the corresponding quarter of 2022. In the reported period, its capital expenditure amounted to $193.2 million, down from $195.3 million. The company registered a free cash flow (“FCF”) of $376.5 million in the quarter under review compared with $341.9 million in the previous year’s quarter.
During the quarter, LEA repurchased 1,290,639 shares of its common stock for a total of $175 million. At the end of the quarter, Lear had a remaining share repurchase authorization of nearly $916 million, which will expire on Dec 31, 2024.
2024 Guidance
It projects its full-year net sales in the band of $24-$24.6 billion, up from $23.5 billion recorded in 2023. Core operating earnings are envisioned in the range of $1,155-$1,305 million, marking an uptick from $1,120 million generated in 2023.
Operating cash flow is projected to be between $1,275 million and $1,425 million compared with $1,249.3 million generated in 2023. Lear anticipates FCF in the band of $600-$750 million compared with $638.2 million generated in 2023. Capital spending is now forecasted to be around $675 million, up from $626.5 million registered in 2023. Adjusted EBITDA is envisioned to be between $1,795 million and $1,945 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, Lear has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Lear has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Lear belongs to the Zacks Automotive - Original Equipment industry. Another stock from the same industry, Gentex (GNTX - Free Report) , has gained 6.9% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Gentex reported revenues of $589.13 million in the last reported quarter, representing a year-over-year change of +19.3%. EPS of $0.50 for the same period compares with $0.37 a year ago.
Gentex is expected to post earnings of $0.47 per share for the current quarter, representing a year-over-year change of +11.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.3%.
Gentex has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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Lear (LEA) Up 5.7% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Lear (LEA - Free Report) . Shares have added about 5.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Lear due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Lear Q4 Earnings Lag Estimates, Revenues Rise Y/Y
Lear reported fourth-quarter 2023 adjusted earnings of $3.03 per share, which increased from $2.81 recorded in the year-ago quarter. The bottom line however missed the Zacks Consensus Estimate of $3.07 per share.
In the reported quarter, revenues increased 9% year over year to $5.8 billion. The top line also beat the Zacks Consensus Estimate of $5.65 billion.
Segment Performance
Sales of the Seating segment totaled $4.34 billion in the reported quarter, reflecting a 7.4% increase from the year-ago quarter and surpassing the Zacks Consensus Estimate of $4.21 billion, thanks to solid backlog and acquisition benefits. Adjusted segment earnings came in at $293.8 million, up from $275.1 million recorded in the year-ago quarter. The segment recorded adjusted margins of 6.8% of sales, which is in line with the previous year's quarter.
Sales in the E-Systems segment were $1.5 billion, up 12.8% year over year and ahead of the Zacks Consensus Estimate of $1.43 billion on a solid backlog. Adjusted segmental earnings amounted to $84 million, up from $63.9 million in the corresponding quarter of 2022. For the E-Systems segment, the adjusted margin was 5.6% of sales, up from 4.8% in the year-ago quarter.
Performance by Region
Sales in the North America region increased 1.3% year over year to $2.27 billion in the quarter under review and exceeded the Zacks Consensus Estimate of $2.25 billion.
Sales in the Europe and Africa region grew 19.2% year over year to $2.17 billion in the quarter. The metric also topped the Zacks Consensus Estimate of $2.04 billion.
Sales in the Asia region totaled $1.17 billion in the quarter, rising 7.3% year over year and surpassing the Zacks Consensus Estimate of $1.16 billion.
Sales in the South America region rose 0.5% year over year to $221.4 million in the quarter, outpacing the Zacks Consensus Estimate of $208 million.
Financial Position
The company had $1.2 billion in cash and cash equivalents as of Dec 31, 2023 compared with $1.11 billion recorded as of Dec 31, 2022. Long-term debt was $2.74 billion as of Dec 31, 2023 compared with a debt of $2.59 billion recorded as of Dec 31, 2022.
During the quarter under discussion, net cash provided by operating activities totaled $569.7 million, an improvement from $537.2 million in the corresponding quarter of 2022. In the reported period, its capital expenditure amounted to $193.2 million, down from $195.3 million. The company registered a free cash flow (“FCF”) of $376.5 million in the quarter under review compared with $341.9 million in the previous year’s quarter.
During the quarter, LEA repurchased 1,290,639 shares of its common stock for a total of $175 million. At the end of the quarter, Lear had a remaining share repurchase authorization of nearly $916 million, which will expire on Dec 31, 2024.
2024 Guidance
It projects its full-year net sales in the band of $24-$24.6 billion, up from $23.5 billion recorded in 2023. Core operating earnings are envisioned in the range of $1,155-$1,305 million, marking an uptick from $1,120 million generated in 2023.
Operating cash flow is projected to be between $1,275 million and $1,425 million compared with $1,249.3 million generated in 2023. Lear anticipates FCF in the band of $600-$750 million compared with $638.2 million generated in 2023. Capital spending is now forecasted to be around $675 million, up from $626.5 million registered in 2023. Adjusted EBITDA is envisioned to be between $1,795 million and $1,945 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, Lear has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Lear has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Lear belongs to the Zacks Automotive - Original Equipment industry. Another stock from the same industry, Gentex (GNTX - Free Report) , has gained 6.9% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Gentex reported revenues of $589.13 million in the last reported quarter, representing a year-over-year change of +19.3%. EPS of $0.50 for the same period compares with $0.37 a year ago.
Gentex is expected to post earnings of $0.47 per share for the current quarter, representing a year-over-year change of +11.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.3%.
Gentex has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.