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Why Is Lear (LEA) Down 18.2% Since Last Earnings Report?
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It has been about a month since the last earnings report for Lear (LEA - Free Report) . Shares have lost about 18.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Lear due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Lear's Q4 Earnings Beat Estimates But Fall Y/Y
Lear reported fourth-quarter 2021 adjusted earnings of $1.22 per share, plunging around 67% year over year. The bottom line, however, surpassed the Zacks Consensus Estimate of $1.07 per share. Higher-than-expected contribution from both the company’s segments led to the upside.
In the reported quarter, revenues declined around 7% year over year to $4,879.8 million. The top line beat the Zacks Consensus Estimate of $4,675.9 million.
Segment Performances
Sales in the Seating segment totaled $3,641 million in fourth-quarter 2021, reflecting a 6.6% decline from the year-ago quarter’s $3,899 million. Nonetheless, the metric surpassed the Zacks Consensus Estimate of $3,521 million. Adjusted segmental earnings came in at $198.7 million, declining from $295.2 million recorded in fourth-quarter 2020, but topping the consensus mark of $173 million. The segment recorded adjusted margins of 5.5% of sales, a decline from 7.6% in the previous-year quarter.
Sales in the E-Systems segment summed $1,239 million, down around 8% year over year. The figure, however, topped the consensus mark of $1,163 million. Adjusted segmental earnings amounted to $37.7 million, plummeting from $102.6 million. The metric, however, surpassed the consensus mark of $33 million. For the E-Systems segment, the adjusted margin was 3% of sales, down from 7.6% in the year-ago quarter.
Financial Position
The company had $1,318.3 million of cash and cash equivalents as of Dec 31, 2021, compared with $1,306.7 million recorded at 2020-end. It had long-term debt of $2,595.2 million as of Dec 31, 2021, up from $2,300.3 million on Dec 31, 2020.
At fourth quarter-end, net cash used in operating activities totaled around $167 million. In the reported period, its capital expenditure amounted to $179.6 million. Free cash flow (FCF) was a negative $12.7 million against a positive cash flow of $233.8 million in the previous-year quarter. The company increased quarterly cash dividend to 77 cents per share, on par with the pre-pandemic level.
2022 Guidance
Full-year net sales are expected within $20.8-$22.3 billion. Core operating earnings are envisioned in the band of $900-$1200 million. Lear also anticipates FCF in the band of $300-$600 million. Capital spending is anticipated to be within $650-$700 million. Adjusted EBITDA has been forecast in the range of $1,500-$1,800 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -19.78% due to these changes.
VGM Scores
Currently, Lear has a subpar Growth Score of D, though it is lagging a bit 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 quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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. Notably, Lear has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Lear (LEA) Down 18.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Lear (LEA - Free Report) . Shares have lost about 18.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Lear due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Lear's Q4 Earnings Beat Estimates But Fall Y/Y
Lear reported fourth-quarter 2021 adjusted earnings of $1.22 per share, plunging around 67% year over year. The bottom line, however, surpassed the Zacks Consensus Estimate of $1.07 per share. Higher-than-expected contribution from both the company’s segments led to the upside.
In the reported quarter, revenues declined around 7% year over year to $4,879.8 million. The top line beat the Zacks Consensus Estimate of $4,675.9 million.
Segment Performances
Sales in the Seating segment totaled $3,641 million in fourth-quarter 2021, reflecting a 6.6% decline from the year-ago quarter’s $3,899 million. Nonetheless, the metric surpassed the Zacks Consensus Estimate of $3,521 million. Adjusted segmental earnings came in at $198.7 million, declining from $295.2 million recorded in fourth-quarter 2020, but topping the consensus mark of $173 million. The segment recorded adjusted margins of 5.5% of sales, a decline from 7.6% in the previous-year quarter.
Sales in the E-Systems segment summed $1,239 million, down around 8% year over year. The figure, however, topped the consensus mark of $1,163 million. Adjusted segmental earnings amounted to $37.7 million, plummeting from $102.6 million. The metric, however, surpassed the consensus mark of $33 million. For the E-Systems segment, the adjusted margin was 3% of sales, down from 7.6% in the year-ago quarter.
Financial Position
The company had $1,318.3 million of cash and cash equivalents as of Dec 31, 2021, compared with $1,306.7 million recorded at 2020-end. It had long-term debt of $2,595.2 million as of Dec 31, 2021, up from $2,300.3 million on Dec 31, 2020.
At fourth quarter-end, net cash used in operating activities totaled around $167 million. In the reported period, its capital expenditure amounted to $179.6 million. Free cash flow (FCF) was a negative $12.7 million against a positive cash flow of $233.8 million in the previous-year quarter. The company increased quarterly cash dividend to 77 cents per share, on par with the pre-pandemic level.
2022 Guidance
Full-year net sales are expected within $20.8-$22.3 billion. Core operating earnings are envisioned in the band of $900-$1200 million. Lear also anticipates FCF in the band of $300-$600 million. Capital spending is anticipated to be within $650-$700 million. Adjusted EBITDA has been forecast in the range of $1,500-$1,800 million.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -19.78% due to these changes.
VGM Scores
Currently, Lear has a subpar Growth Score of D, though it is lagging a bit 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 quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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. Notably, Lear has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.