Lear Corporation LEA reported second-quarter 2019 adjusted earnings per share of $3.78, down from $4.95 recorded in the prior-year quarter. Also, the bottom line missed the Zacks Consensus Estimate of $3.82. At the end of second-quarter 2019, adjusted net income was $236 million compared with $330 million in the prior-year quarter.
During the reported quarter, revenues declined 10% year over year to $5 billion. Also, the Zacks Consensus Estimate was pegged at $5.03 billion. The downside was caused by lower production on key Lear platforms, which were partly offset by the addition of new business.
Moreover, the company’s core operating earnings declined to $352 million from $471 million in second-quarter 2018.
In the reported quarter, margins and adjusted margins in the Seating segment were 7.4% and 8.2% of sales, respectively.
In the E-Systems segment, margins and adjusted margins were 7.3% and 8% of sales, respectively.
Lear Corporation Price, Consensus and EPS Surprise
Lear Corporation price-consensus-eps-surprise-chart | Lear Corporation Quote
Lear had $1.27 billion of cash and cash equivalents as of Jun 30, 2019 compared with $1.49 billion recorded on Dec 31, 2018. The company had long-term debt of $2.30 billion as of Jun 30 compared with $1.94 billion recorded as of Dec 31, 2018.
At the end of the quarter under review, Lear’s net operating cash inflow was $404.3 million compared with $516.9 million as of Jun 30, 2018. During the period, its capital expenditure amounted to $136.5 million, down from $169.4 million recorded in the prior-year quarter.
During the reported quarter, Lear repurchased 1,182,976 shares for $162 million. At the end of the quarter, the company had remaining share repurchase authorization of $1.3 billion, which expires on December 31, 2021. The figure represents approximately 16% of the company’s total market capitalization at current market prices.
Lear reiterated its 2019 guidance. The company currently expects net sales in the range of $19.8-$20.3 billion and adjusted net income in the band of $885-$965 million. Further, it projects capital spending of roughly $650 million compared with the prior outlook of $700 million.
Zacks Rank & Stocks to Consider
Currently, Lear has a Zacks Rank #5 (Strong Sell).
Stocks worth considering in the auto space are Copart, Inc CPRT, CarMax, Inc KMX and Advance Auto Parts, Inc AAP. While Copart sports a Zacks Rank #1 (Strong Buy), CarMax and Advance Auto Parts carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Copart has an expected long-term growth rate of 20%. In the past year, shares of the company have rallied 41.4%.
CarMax has an expected long-term growth rate of 12.6%. In the past year, shares of the company have moved up 21.4%.
Advance Auto Parts has an expected long-term growth rate of 11.6%. In the past year, shares of the company have returned 8.4%.
Radical New Technology Creates $12.3 Trillion Opportunity
Imagine buying Microsoft stock in the early days of personal computers… or Motorola after it released the world’s first cell phone. These technologies changed our lives and created massive profits for investors.
Today, we’re on the brink of the next quantum leap in technology. 7 innovative companies are leading this “4th Industrial Revolution” - and early investors stand to earn the biggest profits.
See the 7 breakthrough stocks now>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
CarMax, Inc. (KMX) : Free Stock Analysis Report
Advance Auto Parts, Inc. (AAP) : Free Stock Analysis Report
Lear Corporation (LEA) : Free Stock Analysis Report
Copart, Inc. (CPRT) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research