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Why Is Lear (LEA) Up 4.4% 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 added about 4.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Lear due for a pullback? 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 drivers.
Lear Surpasses Earnings Estimates in Q4
Lear reported adjusted earnings per share of $4.05 compared with $4.38 recorded in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate of $3.96. At the end of fourth-quarter 2018, adjusted net income was $261.3 million compared with $300.4 million recorded in the prior-year quarter.
During the reported quarter, revenues decreased 8% year over year to $4.94 billion. The Zacks Consensus Estimate was $4.98 billion. The slump is due to 5% fall in global vehicle production, which consists of 15% decline in China, owing to tough economic conditions.
Moreover, the company’s core operating earnings slumped $8 million year over year to $389 million in the reported quarter. In fourth-quarter 2017, the figure was $441 million.
2018 Results
In 2018, Lear reported adjusted net income of $1.21 billion or $18.22 per share, up from $1.18 billion or $17 per share in the previous year.
Revenues for the year went up 3% year over year to $21.1 billion.
Segmental Performances
In the reported quarter, net sales at the Seating segment were $3.7 billion compared with $4.1 billion in fourth-quarter 2017. The adjusted margin was 8% compared with 8.1% in the prior-year quarter.
Net sales at the E-Systems segment was $1.2 billion compared with $1.3 billion generated in the year-ago quarter. Additionally, adjusted margin was 11.3% compared with 14.3% in fourth-quarter 2017.
Financials
Lear had $1.5 billion in cash and cash equivalents as of Dec 31, 2018, almost in line with the figure recorded as ofDec 31, 2017. The company had long-term debt of $12.9 billion as of Dec 31, 2018, compared with $9 billion as of Dec 31, 2017.
At the end of fourth-quarter 2018, Lear’s net operating cash inflow was $758 million in comparison with $598 million as of Dec 31, 2017. During the period, its capital expenditure was $184 million, marking an increase from $164 million recorded in the prior-year quarter. The company’s free cash flow was $574 million, marking an increase from $435 million recorded in the same quarter of 2017.
Capital Deployment
During the reported quarter, Lear repurchased 1.6 million shares for $215 million. As of the end of the fourth quarter, the company had remaining share repurchase authorization of $800 million.
2019 Outlook
Lear currently expects net sales of $20.9-$21.7 billion and adjusted net income of $1.08-$1.17 billion. Further, it projects capital spending of roughly $700 million compared with the last year’s capital expenditure of $677 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Lear has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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. 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) Up 4.4% Since Last Earnings Report?
It has been about a month since the last earnings report for Lear (LEA - Free Report) . Shares have added about 4.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Lear due for a pullback? 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 drivers.
Lear Surpasses Earnings Estimates in Q4
Lear reported adjusted earnings per share of $4.05 compared with $4.38 recorded in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate of $3.96. At the end of fourth-quarter 2018, adjusted net income was $261.3 million compared with $300.4 million recorded in the prior-year quarter.
During the reported quarter, revenues decreased 8% year over year to $4.94 billion. The Zacks Consensus Estimate was $4.98 billion. The slump is due to 5% fall in global vehicle production, which consists of 15% decline in China, owing to tough economic conditions.
Moreover, the company’s core operating earnings slumped $8 million year over year to $389 million in the reported quarter. In fourth-quarter 2017, the figure was $441 million.
2018 Results
In 2018, Lear reported adjusted net income of $1.21 billion or $18.22 per share, up from $1.18 billion or $17 per share in the previous year.
Revenues for the year went up 3% year over year to $21.1 billion.
Segmental Performances
In the reported quarter, net sales at the Seating segment were $3.7 billion compared with $4.1 billion in fourth-quarter 2017. The adjusted margin was 8% compared with 8.1% in the prior-year quarter.
Net sales at the E-Systems segment was $1.2 billion compared with $1.3 billion generated in the year-ago quarter. Additionally, adjusted margin was 11.3% compared with 14.3% in fourth-quarter 2017.
Financials
Lear had $1.5 billion in cash and cash equivalents as of Dec 31, 2018, almost in line with the figure recorded as ofDec 31, 2017. The company had long-term debt of $12.9 billion as of Dec 31, 2018, compared with $9 billion as of Dec 31, 2017.
At the end of fourth-quarter 2018, Lear’s net operating cash inflow was $758 million in comparison with $598 million as of Dec 31, 2017. During the period, its capital expenditure was $184 million, marking an increase from $164 million recorded in the prior-year quarter. The company’s free cash flow was $574 million, marking an increase from $435 million recorded in the same quarter of 2017.
Capital Deployment
During the reported quarter, Lear repurchased 1.6 million shares for $215 million. As of the end of the fourth quarter, the company had remaining share repurchase authorization of $800 million.
2019 Outlook
Lear currently expects net sales of $20.9-$21.7 billion and adjusted net income of $1.08-$1.17 billion. Further, it projects capital spending of roughly $700 million compared with the last year’s capital expenditure of $677 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, Lear has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. 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. Notably, Lear has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.