With The Global Auto Market Slowdown, How Will Lear Perform In Q1 2019?

April 25th, 2019 by Trefis Team
-2.15%
Downside
133
Market
130
Trefis
LEA: Lear logo
LEA
Lear

Lear Corporation (NYSE: LEA), one of the world’s leading suppliers of automotive seating systems and electrical and electronic systems (E-Systems), is set to announce its Q1 2019 results on April 26, 2019, followed by a conference call with analysts. The market expects the company to report revenue close to $5.27 billion in Q1 2019, which would be an increase of 6.6% on a quarter-on-quarter basis. The increase is expected to be driven by a strong backlog, sales resulting from gaining control affiliates, and the acquisition of Grupo Antolin’s seating business. Market expectation is for the company to report earnings of $4.14 per share in Q1 2019, lower than $5.10 per share in the year-ago period, as the company continues to work its way back on track.

 

We have summarized our key expectations from the earnings announcement in our interactive dashboard – What Has Driven Lear’s Revenues & Expenses Over Recent Quarters, And What Can We Expect For Full-Year 2019? In addition, here is more Consumer Discretionary data.

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Key Factors That May Impact Future Performance:

Global Auto Market:

  • The Global Auto market, and hence production, has been slow in the recent past. In the fourth quarter of  2018, global vehicle production was down 5% compared to last year, with China down 15% and the industry is expected to face these challenges in 2019, too. Lear Corporation has been financially strong as they increased Total revenue by 3% to $21.1 billion in 2018, and we expect the same to increase to $21.9 billion by the end of 2019.

Large Backlog Of Orders:

  • Lear Corporation has a consolidated sales backlog of $3.4 billion for the period 2019-2021. 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 45% of this backlog, and Lear Corporation is likely to gain market share in this segment going forward. China also holds the key as $1.2 billion of the total backlog is from that region.

 

Trefis has an estimate of $178 for Lear Corporation’s stock. Expectations due to record backlog and growth from China, along with better margins in the long term, are expected to improve profitability and, in turn, work as a tailwind for the company’s stock price.

 

 

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