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Lear Corporation's (LEA) Q2 Earnings Beat Estimates, Up Y/Y

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Lear Corporation's (LEA) Q2 Earnings Beat Estimates, Up Y/Y

The addition of new business in both product segments, the acquisition of the seating business of Grupo Antolin aid Lear Corporation's (LEA) sales growth.

Lear Corporation LEA reported second-quarter 2018 adjusted earnings per share of $4.95, up 13% from the prior-year quarter figure. Also, the bottom line surpassed the Zacks Consensus Estimate of $4.91.

During the reported quarter, revenues increased 9% year over year to $5.58 billion. The top line slightly beat the Zacks Consensus Estimate of $5.56 billion. The year-over-year rise in sales was primarily due to the addition of new businesses in both the product segments, the acquisition of seating business of Grupo Antolin and the sales impact of obtaining control of certain affiliates, which were partially offset by a lower production volume on key Lear platforms.

Moreover, the company reported 7.2% increase in core operating earnings to $470.5 million in the reported quarter.

Lear Corporation Price, Consensus and EPS Surprise

 

Lear Corporation Price, Consensus and EPS Surprise | Lear Corporation Quote

Segment Performances

Revenues at the Seating segment were $4.27 billion in the reported quarter compared with $4.03 billion recorded in second-quarter 2017. However, adjusted segment margin declined 10 basis points to 8.3%.

Revenues at the E-Systems segment totaled $1.31 billion in comparison with $1.1 billion recorded in the prior-year quarter. However, adjusted segment margin declined 90 basis points to 14%

Financials

Lear had $1.3 billion of cash and cash equivalents as of Jun 30, 2018, compared with $1.5 billion as of Dec 31, 2017. The company had long-term debt of $1.95 billion as of Jun 30, 2018, almost in line with the figure recorded on Dec 31, 2017.

At the end of second-quarter 2018, Lear’s free cash flow was $347.5 million in comparison with $413.2 million as of Jul 1, 2017.

Capital Deployment

During the reported quarter, Lear repurchased 718,000 shares for $140 million. As of the end of the second quarter, the company had a remaining share repurchase authorization of $1.2 billion.

2018 Outlook

The company has kept 2018 outlook unchanged. It anticipates sales in the year to be $21.8-$22 billion. Also, the company expects core operating earnings to be $1,790-$1,810 million.

Zacks Rank & Key Picks

Currently, Lear has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the auto space are Oshkosh Corporation OSK, AB Volvo VLVLY and Fox Factory Holding Corp. FOXF, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Oshkosh has an expected long-term growth rate of 18.3%. Over the past year, shares of the company have moved up 7.3%.

AB Volvo has an expected long-term growth rate of 15%. Over the past year, shares of the company have gained 2.3%.

Fox Factory has an expected long-term growth rate of 15.8%. Shares of the company have risen 30.2% over the past year.

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