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Lear (LEA) Down 5.5% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Lear (LEA - Free Report) . Shares have lost about 5.5% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Lear's Q3 Earnings Miss Estimates, Down Y/Y
Lear reported third-quarter 2021 adjusted earnings of 53 cents per share, tanking 85.8% year over year. The bottom line also fell short of the Zacks Consensus Estimate of 56 cents. Lower-than-expected contribution from both the company’s segments led to the underperformance. For the reported quarter, revenues declined 12.9% year over year to $4,268.2 million. The top line, however, beat the Zacks Consensus Estimate of $4,182 million.
Segment Performances
Sales in the Seating segment totaled $3,166.2 million for third-quarter 2021, reflecting a decline from the year-ago quarter’s $3,691.6 million. Nonetheless, the metric surpassed the Zacks Consensus Estimate of $3,133 million. Adjusted segmental earnings came in at $144 million, declining from $286.3 million recorded in third-quarter 2020 and missing the consensus mark of $176 million. The segment recorded adjusted margins of 4.5% of sales.
Sales in the E-Systems segment summed $1,102 million, down 8.8% year over year. The figure, however, topped the consensus mark of $1,036 million. Adjusted segmental earnings amounted to $23 million, plummeting from $93.1 million recorded in the year-ago quarter. The metric also lagged the consensus mark of $25 million. For the E-Systems segment, adjusted margin was 2.1% of sales.
Financial Position
The company had $1,099.1 million of cash and cash equivalents as of Oct 2, 2021 compared with $1,306.7 million recorded at 2020-end. It had long-term debt of $2,095.8 million as of Oct 2, 2021, down from $2,300.3 million as of Dec 31, 2020.
At third quarter-end, net cash used in operating activities totaled $4.4 million. For the reported period, its capital expenditure amounted to $152.6 million. Free cash flow (FCF) came in at a negative $157 million.
2021 Guidance Down
Amid persistent supply chain disruptions and shortage of components, Lear has downwardly revised its 2021 projections. Full-year net sales are now expected within $18.8-$19.2 billion, down from the previous guided range of $20.3-$21.1 billion. Core operating earnings are envisioned in the band of $750-$850 million, down from the prior expectation of $1,340-$1,310 million. Lear now anticipates FCF of $175 million versus the prior view of 550-$700 million. Capital spending is anticipated to be $600 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -47.79% due to these changes.
VGM Scores
At this time, Lear has a nice Growth Score of B, 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 quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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 these revisions 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.
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Lear (LEA) Down 5.5% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Lear (LEA - Free Report) . Shares have lost about 5.5% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Lear's Q3 Earnings Miss Estimates, Down Y/Y
Lear reported third-quarter 2021 adjusted earnings of 53 cents per share, tanking 85.8% year over year. The bottom line also fell short of the Zacks Consensus Estimate of 56 cents. Lower-than-expected contribution from both the company’s segments led to the underperformance. For the reported quarter, revenues declined 12.9% year over year to $4,268.2 million. The top line, however, beat the Zacks Consensus Estimate of $4,182 million.
Segment Performances
Sales in the Seating segment totaled $3,166.2 million for third-quarter 2021, reflecting a decline from the year-ago quarter’s $3,691.6 million. Nonetheless, the metric surpassed the Zacks Consensus Estimate of $3,133 million. Adjusted segmental earnings came in at $144 million, declining from $286.3 million recorded in third-quarter 2020 and missing the consensus mark of $176 million. The segment recorded adjusted margins of 4.5% of sales.
Sales in the E-Systems segment summed $1,102 million, down 8.8% year over year. The figure, however, topped the consensus mark of $1,036 million. Adjusted segmental earnings amounted to $23 million, plummeting from $93.1 million recorded in the year-ago quarter. The metric also lagged the consensus mark of $25 million. For the E-Systems segment, adjusted margin was 2.1% of sales.
Financial Position
The company had $1,099.1 million of cash and cash equivalents as of Oct 2, 2021 compared with $1,306.7 million recorded at 2020-end. It had long-term debt of $2,095.8 million as of Oct 2, 2021, down from $2,300.3 million as of Dec 31, 2020.
At third quarter-end, net cash used in operating activities totaled $4.4 million. For the reported period, its capital expenditure amounted to $152.6 million. Free cash flow (FCF) came in at a negative $157 million.
2021 Guidance Down
Amid persistent supply chain disruptions and shortage of components, Lear has downwardly revised its 2021 projections. Full-year net sales are now expected within $18.8-$19.2 billion, down from the previous guided range of $20.3-$21.1 billion. Core operating earnings are envisioned in the band of $750-$850 million, down from the prior expectation of $1,340-$1,310 million. Lear now anticipates FCF of $175 million versus the prior view of 550-$700 million. Capital spending is anticipated to be $600 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision. The consensus estimate has shifted -47.79% due to these changes.
VGM Scores
At this time, Lear has a nice Growth Score of B, 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 quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. 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 these revisions 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.