Lear Delivers Strong Q3 2017 Results, Beats Analyst Expectations

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LEA: Lear logo
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Lear

 

Lear Corporation (NYSE:LEA) reported its Q3 2017 results on October 25th and the company beat consensus analyst estimates for both revenues and EPS (earnings per share). It recorded a 10% year on year (yoy) increase in sales and a 24% increase in adjusted EPS.  The increase in sales was significantly above the industry growth of 2% driven primarily by the company’s acquisition of Grupo Anotlin’s seating business earlier this year, a significant sales backlog, and favorable foreign exchange rates. Lear Corporation’s share repurchase program, a lower tax rate, and efficient operating performance contributed to the EPS growth in this quarter.

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Europe and Africa and Asia have been the bright spots for the company in Q3 2017, registering strong sales growth.  The 12% increase in the company’s income was driven by a 20 basis points increase in margins and the addition of new business via the recent acquisition.

Below is a summary of the segment-wise performance of Lear in Q3 2017 :

 

Going Forward:

Improvement In Future Guidance: The company updated its financial outlook for the year 2017 along with the Q3 2017 announcement. The revised outlook is based on the latest HIS production forecast and a conversion rate of $1.70 for the Euro.  Lear Corporation now expects its revenues to be higher by $400 million and core operating income by $ 50 million. The company also increased its guidance for capital expenditure by $25 million reflecting the increase in investment to support its increasing business post acquisition of Grupo Antolin.

Strong Growth Potential Of the E-Systems Business: Emerging industry trends around connected vehicles, electrified vehicles, and autonomous vehicles provide a strong growth opportunity for Lear Corporation in the next few years. The company expects these trends to generate a $53 billion opportunity by 2027 and the company is well poised to capture this growth. Lear Corporation is already witnessing increasing new business due to these mega trends and this momentum is likely to grow in the coming years.

Increasing Global Market Share In The Seating Segment: Through increased regional diversification and its incremental new business wins, Lear Corporation aims to increase the global market share of its seating segment to 30% in the next few years.

Lear is well positioned with its unique product offering to capture the growth in its segments as the automotive landscape moves towards connected and autonomous vehicles. The company’s growth momentum is likely to continue in the years to come.

 

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