Lear Corporation’s (LEA - Free Report) fourth-quarter 2019 adjusted earnings came in at $2.64 per share, down the $4.05 recorded in the prior-year quarter. However, the bottom line surpassed the Zacks Consensus Estimate of $2.25. Higher-than-expected revenues in both its Seating and E-Systems segments led to this outperformance.
At the end of fourth-quarter 2019, adjusted net income was $161 million compared with the prior-year quarter’s $261 million.
In the reported quarter, revenues declined 2.51% year over year to $4.8 billion. This downside resulted from lower production on key Lear platforms and net foreign-exchange rate fluctuations, partly offset by the addition of business and the Xevo acquisition. However, the top line surpassed the Zacks Consensus Estimate of $4.5 billion.
The company’s core operating earnings declined to $241 million from the $389 million reported in fourth-quarter 2018.
Segment Performances
In fourth-quarter 2019, sales in the Seating segment totaled $3,629 million, down 2.82% year over year. Adjusted segment earnings were $212.7 million compared to $299.4 million in the fourth quarter of 2018. However, it topped the Zacks Consensus Estimate of $201 million in the quarter. Adjusted margins for the Seating segment was 5.9% of sales.
Sales in the E-Systems segment totaled $1,188.5 million, marking a decline of 1.62% year over year, in fourth-quarter 2019. Adjusted segment earnings amounted to $91.9 million in the quarter compared to $136 million in the fourth quarter of 2018. However, it surpassed the consensus mark of $71 million. For the E-Systems segment, adjusted margins were 7.7% of sales.
Share Repurchase
During the fourth quarter, Lear repurchased 215,200 shares for $25 million. At the end of the quarter, the company had remaining share-repurchase authorization of $1.2 billion, which will expire on Dec 31, 2021. The figure represents approximately 15% of Lear’s total market capitalization at current market prices.
Financial Position
The company had $1,487 million of cash and cash equivalents as of Dec 31, 2019, compared with $1,493 million recorded as of Dec 31, 2018. It had long-term debt of $2.29 billion as of Dec 31, 2019, compared with $1.94 billion recorded as of Dec 31, 2018. The long-term debt to capital ratio stands at 33.8%.
At the end of the quarter, Lear’s net operating cash inflow was $485 million compared with $758.2 million as of Dec 31, 2018. During the period, its capital expenditure amounted to $193.8 million, up from the $184.3 million recorded in the prior-year quarter. Free cash flow came in at $291.2 million, down from the year-ago figure of $573.9 million.
2020 Outlook
For full-year 2020, Lear expects net sales of $19.4-$20.2 billion. Adjusted net income is anticipated in the band of $780-$880 million. Further, the company projects capital spending of roughly $600 million, while free cash flow is expected between $600-$700 million.
Zacks Rank & Stocks to Consider
Lear currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Auto-Tires-Trucks sector include Gentex Corporation (GNTX - Free Report) , Tesla, Inc. (TSLA - Free Report) and SPX Corporation (SPXC - Free Report) , each carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Gentex Corporation has an estimated earnings growth rate of 7.32% for 2020. The company’s shares have appreciated 40.3% in a year’s time.
Tesla has a projected earnings growth rate of 6,460% for the ongoing year. Its shares have surged 83.6% over the past year.
SPX has an expected earnings growth rate of 8.09% for the current year. The stock has rallied 73.2% in the past year.
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Lear Corporation’s (LEA - Free Report) fourth-quarter 2019 adjusted earnings came in at $2.64 per share, down the $4.05 recorded in the prior-year quarter. However, the bottom line surpassed the Zacks Consensus Estimate of $2.25. Higher-than-expected revenues in both its Seating and E-Systems segments led to this outperformance.
At the end of fourth-quarter 2019, adjusted net income was $161 million compared with the prior-year quarter’s $261 million.
In the reported quarter, revenues declined 2.51% year over year to $4.8 billion. This downside resulted from lower production on key Lear platforms and net foreign-exchange rate fluctuations, partly offset by the addition of business and the Xevo acquisition. However, the top line surpassed the Zacks Consensus Estimate of $4.5 billion.
The company’s core operating earnings declined to $241 million from the $389 million reported in fourth-quarter 2018.
Segment Performances
In fourth-quarter 2019, sales in the Seating segment totaled $3,629 million, down 2.82% year over year. Adjusted segment earnings were $212.7 million compared to $299.4 million in the fourth quarter of 2018. However, it topped the Zacks Consensus Estimate of $201 million in the quarter. Adjusted margins for the Seating segment was 5.9% of sales.
Sales in the E-Systems segment totaled $1,188.5 million, marking a decline of 1.62% year over year, in fourth-quarter 2019. Adjusted segment earnings amounted to $91.9 million in the quarter compared to $136 million in the fourth quarter of 2018. However, it surpassed the consensus mark of $71 million. For the E-Systems segment, adjusted margins were 7.7% of sales.
Share Repurchase
During the fourth quarter, Lear repurchased 215,200 shares for $25 million. At the end of the quarter, the company had remaining share-repurchase authorization of $1.2 billion, which will expire on Dec 31, 2021. The figure represents approximately 15% of Lear’s total market capitalization at current market prices.
Financial Position
The company had $1,487 million of cash and cash equivalents as of Dec 31, 2019, compared with $1,493 million recorded as of Dec 31, 2018. It had long-term debt of $2.29 billion as of Dec 31, 2019, compared with $1.94 billion recorded as of Dec 31, 2018. The long-term debt to capital ratio stands at 33.8%.
At the end of the quarter, Lear’s net operating cash inflow was $485 million compared with $758.2 million as of Dec 31, 2018. During the period, its capital expenditure amounted to $193.8 million, up from the $184.3 million recorded in the prior-year quarter. Free cash flow came in at $291.2 million, down from the year-ago figure of $573.9 million.
2020 Outlook
For full-year 2020, Lear expects net sales of $19.4-$20.2 billion. Adjusted net income is anticipated in the band of $780-$880 million. Further, the company projects capital spending of roughly $600 million, while free cash flow is expected between $600-$700 million.
Zacks Rank & Stocks to Consider
Lear currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Auto-Tires-Trucks sector include Gentex Corporation (GNTX - Free Report) , Tesla, Inc. (TSLA - Free Report) and SPX Corporation (SPXC - Free Report) , each carrying a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Gentex Corporation has an estimated earnings growth rate of 7.32% for 2020. The company’s shares have appreciated 40.3% in a year’s time.
Tesla has a projected earnings growth rate of 6,460% for the ongoing year. Its shares have surged 83.6% over the past year.
SPX has an expected earnings growth rate of 8.09% for the current year. The stock has rallied 73.2% in the past year.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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