Lear Corporation Beats Analysts Expectations In Q4 2017, Announces Another Strategic Acquisition

January 29th, 2018 by Trefis Team
-1.70%
Downside
132
Market
130
Trefis
LEA: Lear logo
LEA
Lear

Lear Corporation (NYSE:LEA) announced its Q4 and full year 2017 results on Friday January 26, 2018 and the company reported a 16% year on year growth in revenues for Q4 2017 and a 15% increase in EPS (earnings per share) compared to a 13% expected growth. Revenues for 2017 stood at $20.5 billion – a 10% growth compared to the previous year.  After completing the  acquisition of Grupo Antolin’s seating business in 2017, Lear Corporation announced that it would acquire EXO Technologies, a developer of differentiated GPS technology. This acquisition is likely to strengthen the company’s E-Systems segment going forward.

The charts below summarize Lear Corporation’s performance in Q4 2017:

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You can click here to access these charts.

Going Forward:

  • The changing industry trends have led to a huge future opportunity for Lear Corporation. The transition to crossovers and SUVs which will lead to a higher content per vehicle, presents a growth opportunity to the company’s seating business. Similarly the push towards connected vehicles and electric vehicles is likely to accelerate the growth in Lear Corporation’s E Seating business.
  • For 2018, Lear Corporation expects sales to be in the range of $21.4 – $ 21.6 billion and core operating earnings to be around $1.750 to $1.755 billion.
  • Lear Corporation has a consolidated sales backlog of $3.2 billion for the period 2018-2020. This is an indication of demand for the company’s products and shows that Lear can grow at an accelerated pace in the future. The E-Systems segment represents 41% of this backlog and Lear Corporation is likely to gain market share in this segment going forward.
  • The EXO acquisition is likely to enhance the company’s software capabilities in the area of connectivity and drive revenues for the E-Systems segment.

We will be updating our model for Lear Corporation based on the above results, which can lead to a change in our price estimate for the company.

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