Yahoo Finance Lear (LEA) Down 1.9% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Lear (LEA). Shares have lost about 1.9% 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 the most recent earnings report in order to get a better handle on the important drivers.
Lear Q1 Earnings Top Estimates
Lear reported first-quarter 2024 adjusted earnings of $3.18 per share, which increased from $2.78 recorded in the year-ago quarter and beat the Zacks Consensus Estimate of $3.04 per share. In the reported quarter, revenues increased 2.5% year over year to $6 billion and were in line with the Zacks Consensus Estimate.
Segment Performance
Sales of the Seating segment totaled $4.47 billion in the reported quarter, up from $4.45 billion generated in the year-ago quarter billion, thanks to solid backlog, partly offset by unfavorable platform mix. Adjusted segment earnings came in at $294.9 million, down from $300.4 million recorded in the year-ago quarter. The segment recorded adjusted margins of 6.6% of sales, compared with 6.7% recorded in the previous year's quarter.
Sales of the E-Systems segment were $1.5 billion, up 7.1% year over year on a solid backlog and favorable platform mix. Adjusted segmental earnings amounted to $77.1 million, up from $48.9 million in the corresponding quarter of 2023. For the E-Systems segment, the adjusted margin was 5.1% of sales, up from 3.5% in the year-ago quarter.
Performance by Region
Sales in the North America region increased 4% year over year to $2.47 billion in the quarter under review. Sales in the Europe and Africa region grew 1% year over year to $2.25 billion. Sales in the Asia region totaled $1.06 billion in the quarter, rising 4% year over year. Sales in the South America region totaled $205.2 million in the quarter, down from $215 million generated in the year-ago period.
Financial Position
The company had $930.4 million in cash and cash equivalents as of Mar 31, 2024, compared with $1.19 billion recorded as of Dec 31, 2023. Long-term debt was $2.74 billion as of Mar 31, 2024, at similar levels with 2023 end.
During the quarter under discussion, net cash used in operating activities totaled $34.6 million. In the reported period, capital expenditure amounted to $113.6 million. The company registered negative free cash flow (“FCF”) of $148.2 million in the quarter.
During the quarter, LEA repurchased 215,774 shares of its common stock for a total of $30 million. In February 2024, the company boosted its buyback authorization to $1.5 billion. At the end of the quarter, Lear had a remaining share repurchase authorization of nearly $1.5 billion, which will expire on Dec 31, 2026.
2024 Guidance
Lear projects its full-year net sales in the band of $24-$24.6 billion, up from $23.5 billion recorded in 2023. Core operating earnings are envisioned in the range of $1.15-$1.30 billion, marking an uptick from $1.12 billion generated in 2023.
Operating cash flow is projected to be between $1.27 billion and $1.42 billion compared with $1.25 million generated in 2023. Lear anticipates FCF in the band of $600-$750 million compared with $638.2 million generated in 2023. Capital spending is now forecast to be around $675 million, up from $626.5 million registered in the year-ago quarter. Adjusted EBITDA is envisioned to be between $1.79 billion and $1.94 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -9.24% 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 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.
Performance of an Industry Player
Lear is part of the Zacks Automotive - Original Equipment industry. Over the past month, Gentex (GNTX), a stock from the same industry, has gained 0.9%. The company reported its results for the quarter ended March 2024 more than a month ago.
Gentex reported revenues of $590.23 million in the last reported quarter, representing a year-over-year change of +7.2%. EPS of $0.47 for the same period compares with $0.42 a year ago.
Gentex is expected to post earnings of $0.52 per share for the current quarter, representing a year-over-year change of +10.6%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.8%.
Gentex has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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Lear Corporation (LEA) : Free Stock Analysis Report
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