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What Should We Expect From Lear Corporation's (NYSE:LEA) Earnings Over The Next Year?

Simply Wall St

As Lear Corporation (NYSE:LEA) released its earnings announcement on 29 June 2019, analyst forecasts seem fairly subdued, as a 1.5% rise in profits is expected in the upcoming year, against the higher past 5-year average growth rate of 15%. Presently, with latest-twelve-month earnings at US$1.1b, we should see this growing to US$1.2b by 2020. Below is a brief commentary on the longer term outlook the market has for Lear. For those interested in more of an analysis of the company, you can research its fundamentals here.

See our latest analysis for Lear

Exciting times ahead?

Longer term expectations from the 18 analysts covering LEA’s stock is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To understand the overall trajectory of LEA's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

NYSE:LEA Past and Future Earnings, August 9th 2019

This results in an annual growth rate of 10% based on the most recent earnings level of US$1.1b to the final forecast of US$1.4b by 2022. This leads to an EPS of $19.22 in the final year of projections relative to the current EPS of $17.35. In 2022, LEA's profit margin will have expanded from 5.4% to 6.0%.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Lear, there are three relevant factors you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Lear worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Lear is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Lear? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.