Lear (NYSE:LEA) Issues Earnings Results, Beats Estimates By $0.39 EPS

Key Points

• Lear beat earnings expectations: Third-quarter adjusted EPS was $3.71, surpassing the $3.32 consensus and rising from $2.79 a year earlier. Revenue increased about 2% year over year to $5.77 billion but slightly missed estimates.
• Profitability and shareholder returns improved: Core operating earnings rose 6% to $256 million, while Lear repurchased $175 million of stock, paid dividends and expanded its buyback authorization to $1.5 billion through 2029.
• Automotive-market pressures remain: Lear lowered its full-year revenue outlook by approximately $225 million due to weaker production and consumer demand in China, though it maintained its core operating earnings guidance.

Lear (NYSE:LEA - Get Free Report) announced its quarterly earnings results on Friday. The auto parts company reported $3.71 earnings per share (EPS) for the quarter, beating the consensus estimate of $3.32 by $0.39, FiscalAI reports. Lear had a net margin of 2.35% and a return on equity of 14.18%. The company had revenue of $5.77 billion during the quarter, compared to the consensus estimate of $5.81 billion. During the same quarter in the previous year, the company posted $2.79 earnings per share. The company's revenue for the quarter was up 1.6% compared to the same quarter last year.

Here are the key takeaways from Lear's conference call:

• Third-quarter results improved year over year: sales rose 2% to $5.8 billion despite a 2% decline in Lear-weighted industry production, while core operating earnings increased 6% to $256 million and adjusted EPS climbed 33% to $3.71.
• Lear generated approximately $3.9 billion in year-to-date net business awards, including significant Seating wins with Mahindra, BYD, Mercedes and Jaguar Land Rover, while roughly 70% of E-Systems awards came from new or conquest programs.
• The company highlighted its Orion, Michigan facility as a scalable automation blueprint that is expected to reduce Seating conversion costs by approximately 10% to 15%; Lear also completed its $350 million share-repurchase target early and expanded authorization to $1.5 billion through 2029.
• Lear reduced its full-year revenue outlook by approximately $225 million, primarily because of lower production volumes and worsening consumer demand in China, although it maintained its core operating earnings outlook through restructuring savings, operational improvements and commercial recoveries.
• Management expects ongoing challenges from China, commodities and launch costs, but said it remains confident in delivering targeted net performance improvements in 2027; full 2027 guidance will be provided in February.

Lear Price Performance

Shares of Lear stock traded up $1.09 during midday trading on Friday, hitting $118.47. 841,160 shares of the company were exchanged, compared to its average volume of 602,615. The company has a debt-to-equity ratio of 0.51, a current ratio of 1.31 and a quick ratio of 1.04. The firm has a market cap of $5.84 billion, a P/E ratio of 11.04, a PEG ratio of 0.66 and a beta of 1.29. Lear has a 52 week low of $99.00 and a 52 week high of $150.33. The firm has a 50 day simple moving average of $122.30 and a 200-day simple moving average of $128.39.

Lear Announces Dividend

The company also recently disclosed a quarterly dividend, which was paid on Tuesday, September 22nd. Stockholders of record on Wednesday, September 2nd were given a dividend of $0.77 per share. The ex-dividend date was Wednesday, September 2nd. This represents a $3.08 dividend on an annualized basis and a dividend yield of 2.6%. Lear's payout ratio is currently 28.70%.

Trending Headlines about Lear

Here are the key news stories impacting Lear this week:

• Positive Sentiment: Adjusted earnings beat estimates: Lear reported third-quarter adjusted EPS of $3.71, well above the $3.32 consensus estimate and up from $2.79 a year earlier. Lear Q3 Earnings Top Estimates
• Positive Sentiment: Profitability and cash generation improved: Revenue rose approximately 2% year over year to $5.773 billion, while net income increased 26% to $136.6 million and core operating earnings grew to $255.7 million. Operating cash flow was $329.3 million. Lear Q3 Revenue Rises 2% to $5.8 Billion
• Positive Sentiment: Shareholder returns continued: Lear repurchased $175 million of stock and paid $38 million in dividends during the quarter, potentially supporting per-share results and signaling confidence in cash generation. Lear Reports Third Quarter 2026 Results
• Neutral Sentiment: Full-year outlook was maintained: Lear kept its core operating earnings outlook and projected 2026 sales of $23.35 billion to $23.75 billion, with operating cash flow guidance of $1.225 billion to $1.325 billion. Maintaining guidance reduces the risk of an estimate reset but provides limited upside surprise.
• Negative Sentiment: Revenue slightly missed expectations: Sales of $5.773 billion were below the approximately $5.81 billion consensus forecast, highlighting continued pressure in the automotive production environment. Lear Earnings Beat and Revenue Miss
• Negative Sentiment: Insider selling is a cautionary signal: Company insiders reported 12 sales and no purchases over the past six months, including sales by the CEO and CFO. While these transactions may be routine, they could weigh on sentiment.

Lear announced that its board has authorized a share buyback plan on Thursday, September 24th that allows the company to buy back $1.50 billion in outstanding shares. This repurchase authorization allows the auto parts company to reacquire up to 25.7% of its shares through open market purchases. Share repurchase plans are typically an indication that the company's leadership believes its shares are undervalued.

Insiders Place Their Bets

In other news, Director Conrad L. Mallett, Jr. sold 1,646 shares of Lear stock in a transaction on Thursday, August 6th. The stock was sold at an average price of $121.35, for a total value of $199,742.10. Following the completion of the sale, the director directly owned 37 shares of the company's stock, valued at approximately $4,489.95. This trade represents a 97.80% decrease in their position. The transaction was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this hyperlink. 1.02% of the stock is owned by company insiders.

Wall Street Analysts Forecast Growth

Several analysts recently commented on the company. The Goldman Sachs Group lowered their target price on Lear from $140.00 to $124.00 and set a "buy" rating on the stock in a research report on Tuesday, October 6th. Deutsche Bank Aktiengesellschaft set a $131.00 price objective on shares of Lear in a report on Monday, August 3rd. Wall Street Zen lowered Lear from a "buy" rating to a "hold" rating in a research note on Sunday, October 25th. Weiss Ratings lowered Lear from a "buy (b-)" rating to a "hold (c+)" rating in a report on Wednesday, September 9th. Finally, UBS Group lowered their price objective on shares of Lear from $141.00 to $132.00 and set a "neutral" rating on the stock in a research note on Wednesday, October 7th. One equities research analyst has rated the stock with a Strong Buy rating, three have issued a Buy rating and twelve have assigned a Hold rating to the company. Based on data from MarketBeat, Lear currently has an average rating of "Hold" and an average target price of $143.58.

About Lear

Lear Corporation is a global automotive technology company that designs and manufactures products used in passenger vehicles and commercial vehicles. Its operations are organized primarily around two areas: seating and e-systems. Lear supplies complete vehicle seating systems, including seats, structures, mechanisms, foam, covers and related components, as well as electrical distribution systems and other technologies that support vehicle power management and connectivity.

The company serves automotive manufacturers and their vehicle programs in major markets across North America, Europe, Asia and other regions.

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