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Don't Overlook Lear (LEA) International Revenue Trends While Assessing the Stock

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Have you looked into how Lear (LEA - Free Report) performed internationally during the quarter ending March 2024? Considering the widespread global presence of this automotive seating and electrical distribution systems company, examining the trends in international revenues is essential for assessing its financial resilience and prospects for growth.

In the current era of a tightly interconnected global economy, the proficiency of a company to penetrate international markets significantly influences its financial health and trajectory of growth. For investors, the key is to grasp how reliant a company is on overseas markets, as this provides insights into the durability of its earnings, its ability to exploit different economic cycles, and its overall growth capabilities.

International market involvement serves as insurance against economic downturns at home and enables engagement with economies that are growing more quickly. Still, this move toward diversification is not without its challenges, as it involves navigating through the fluctuations of currencies, geopolitical threats, and the distinctive nature of various markets.

While delving into LEA's performance for the past quarter, we observed some fascinating trends in the revenue from its foreign segments that are commonly modeled and observed by analysts on Wall Street.

The company's total revenue for the quarter amounted to $5.99 billion, marking an increase of 2.6% from the year-ago quarter. We will next turn our attention to dissecting LEA's international revenue to get a clearer picture of how significant its operations are outside its main base.

A Dive into LEA's International Revenue Trends

During the quarter, Asia contributed $1.06 billion in revenue, making up 17.7% of the total revenue. When compared to the consensus estimate of $1.12 billion, this meant a surprise of -4.99%. Looking back, Asia contributed $1.17 billion, or 20.1%, in the previous quarter, and $1.02 billion, or 17.4%, in the same quarter of the previous year.

Europe and Africa generated $2.25 billion in revenues for the company in the last quarter, constituting 37.6% of the total. This represented a surprise of +8.45% compared to the $2.08 billion projected by Wall Street analysts. Comparatively, in the previous quarter, Europe and Africa accounted for $2.17 billion (37.2%), and in the year-ago quarter, it contributed $2.23 billion (38.2%) to the total revenue.

Of the total revenue, $205.2 million came from South America during the last fiscal quarter, accounting for 3.4%. This represented a surprise of -9.32% as analysts had expected the region to contribute $226.28 million to the total revenue. In comparison, the region contributed $221.4 million, or 3.8%, and $215 million, or 3.7%, to total revenue in the previous and year-ago quarters, respectively.

Projected Revenues in Foreign Markets

For the current fiscal quarter, it is anticipated by Wall Street analysts that Lear will report a total revenue of $6.15 billion, which reflects an increase of 2.5% from the same quarter in the previous year. The revenue contributions are expected to be 19.1% from Asia ($1.17 billion), 35.4% from Europe and Africa ($2.18 billion) and 3.9% from South America ($236.76 million).

For the full year, the company is projected to achieve a total revenue of $24.36 billion, which signifies a rise of 3.8% from the last year. The share of this revenue from various regions is expected to be: Asia at 19.1% ($4.66 billion), Europe and Africa at 34.8% ($8.46 billion) and South America at 3.9% ($957.76 million).

Closing Remarks

The dependency of Lear on global markets for its revenues presents a mix of potential gains and hazards. Thus, monitoring the trends in its overseas revenues can be a key indicator for predicting the firm's future performance.

In an era of growing international ties and escalating geopolitical disputes, financial analysts on Wall Street pay keen attention to these developments to fine-tune their earnings estimations for businesses operating across borders. It's important to note, however, that a range of additional variables, like a company's local market status, also play a crucial role in shaping these forecasts.

Emphasizing a company's shifting earnings prospects is a key aspect of our approach at Zacks, especially since research has proven its substantial influence on a stock's price in the short run. This correlation is positively aligned, meaning that improved earnings projections tend to boost the stock's price.

The Zacks Rank, our proprietary stock rating tool, comes with an externally validated impressive track record. It effectively utilizes shifts in earnings projections to act as a dependable barometer for forecasting short-term stock price trends.

Lear currently has a Zacks Rank #3 (Hold), indicating that it could perform in line with the broader market in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Assessing Lear's Stock Price Movement in Recent Times

Over the past month, the stock has lost 9.6% versus the Zacks S&P 500 composite's 1.6% decrease. The Zacks Auto-Tires-Trucks sector, of which Lear is a part, has declined 1.4% over the same period. The company's shares have declined 5.6% over the past three months compared to the S&P 500's 3.8% increase. Over the same period, the sector has risen 1.6%.

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