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Lear (LEA) Q4 Earnings: Is a Beat in Store for the Stock?
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Lear Corporation (LEA - Free Report) is set to report fourth-quarter 2016 results, before the opening bell on Jan 26. Last quarter, the company posted a positive earnings surprise of 5.63%. Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Lear is likely to beat earnings this quarter because it has the right combination of the two key components.
Zacks ESP:Earnings ESP for Lear is +1.47% as the Most Accurate estimate of $3.45 is above the Zacks Consensus Estimate of $3.40. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Lear carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings. Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
The combination of Lear’s Zacks Rank #3 and positive ESP makes us reasonably confident of an earnings beat.
What is Driving the Better-than-Expected Earnings?
Based on the company’s strong performance, Lear raised its full-year earnings guidance for 2016. Adjusted net income is expected to be in the range of $980 million to $1 billion, higher than previous expectation in range of $935 million to $975 million. An encouraging annual guidance raises hope for improvement in the company’s fourth-quarter results as well.
The company is also positioned to gain from the partnership with Tempronics. Under the partnership Lear will obtain a minority equity interest in Tempronics and will also secure rights in the thermoelectric seat heating and cooling technology for automotive applications. The thermoelectric seat heating and cooling technologies of Tempronics help to heat and cool seats faster using lesser energy. The company will also benefit from its foray into new businesses, higher volumes and ongoing cost reduction initiatives.
Price Performance
In the last three months, share price of Lear increased 19.3% while the Zacks categorized Auto Manufacturers-Foreign industry saw a 14.6% increase. The company benefitted from a raised 2016 guidance and the signing of a strategic partnership.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Autoliv Inc. (ALV - Free Report) has an Earnings ESP of +3.85% and a Zacks Rank #3. The company’s fourth-quarter and full-year 2016 financial results are scheduled for release on Feb 2.
American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) has an Earnings ESP of +2.94% and a Zacks Rank #3. The company is expected to report fourth-quarter and full-year 2016 financial numbers on Feb 10.
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Lear (LEA) Q4 Earnings: Is a Beat in Store for the Stock?
Lear Corporation (LEA - Free Report) is set to report fourth-quarter 2016 results, before the opening bell on Jan 26. Last quarter, the company posted a positive earnings surprise of 5.63%. Let’s see how things are shaping up for this announcement.
Why a Likely Positive Surprise?
Our proven model shows that Lear is likely to beat earnings this quarter because it has the right combination of the two key components.
Zacks ESP: Earnings ESP for Lear is +1.47% as the Most Accurate estimate of $3.45 is above the Zacks Consensus Estimate of $3.40. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Lear carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings. Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
The combination of Lear’s Zacks Rank #3 and positive ESP makes us reasonably confident of an earnings beat.
Lear Corporation Price and EPS Surprise
Lear Corporation Price and EPS Surprise | Lear Corporation Quote
What is Driving the Better-than-Expected Earnings?
Based on the company’s strong performance, Lear raised its full-year earnings guidance for 2016. Adjusted net income is expected to be in the range of $980 million to $1 billion, higher than previous expectation in range of $935 million to $975 million. An encouraging annual guidance raises hope for improvement in the company’s fourth-quarter results as well.
The company is also positioned to gain from the partnership with Tempronics. Under the partnership Lear will obtain a minority equity interest in Tempronics and will also secure rights in the thermoelectric seat heating and cooling technology for automotive applications. The thermoelectric seat heating and cooling technologies of Tempronics help to heat and cool seats faster using lesser energy. The company will also benefit from its foray into new businesses, higher volumes and ongoing cost reduction initiatives.
Price Performance
In the last three months, share price of Lear increased 19.3% while the Zacks categorized Auto Manufacturers-Foreign industry saw a 14.6% increase. The company benefitted from a raised 2016 guidance and the signing of a strategic partnership.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Wabash National Corporation (WNC - Free Report) has an Earnings ESP of +2.63% and a Zacks Rank #1 (Strong Buy). The company is slated to report fourth-quarter and full-year 2016 results on Jan 31. You can see the complete list of today’s Zacks #1 Rank stocks here.
Autoliv Inc. (ALV - Free Report) has an Earnings ESP of +3.85% and a Zacks Rank #3. The company’s fourth-quarter and full-year 2016 financial results are scheduled for release on Feb 2.
American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) has an Earnings ESP of +2.94% and a Zacks Rank #3. The company is expected to report fourth-quarter and full-year 2016 financial numbers on Feb 10.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>